In morning trade the South32 Ltd (ASX: S32) share price has dropped lower following the release of its quarterly update.
At the time of writing the mining giant's shares are down almost 2% to $3.45.
What happened in the third quarter?
South32 had a reasonably mixed third quarter. Production was down quarter on quarter across all operations except for silver which was flat.
Despite this, the company still achieved record year to date ore production at Australia Manganese and increased its production guidance at both of its manganese ore operations for FY 2019. Management made the move in response to favourable market conditions.
Things weren't quite as positive at its Worsley Alumina operation. The company has lowered production guidance for FY 2019 in order to focus on improving its calciner performance to sustainably achieve nameplate capacity.
It has also reduced FY 2019 production guidance at South Africa Energy Coal, including low margin domestic production by 2Mt and export production by 0.8Mt following community protests and a slower than expected ramp-up of activity at Klipspruit after an insurable dragline outage.
Over at its Illawarra Metallurgical Coal operation things were a little more positive. Management advised that it remains on track to achieve its production guidance after completing longwall moves at Appin and Dendrobium following the end of the quarter and successfully renegotiating the remaining labour agreements.
Positively, management has worked hard at mitigating inflationary pressures and has maintained FY 2019 unit cost guidance for all its operations.
Should you invest?
Although I would choose BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) ahead of it, I do think that South32's diverse operations makes it one of the best options in the resources sector for investors to consider right now.
