South32 to Maintain Aluminum Output Levels Despite Low Prices

  • Industrial metal has fallen to the lowest since 2009
  • Manganese mines in South Africa to remain closed for 2015

South32 Ltd., the miner spun out of BHP Billiton Ltd., said its aluminum smelters in southern Africa will maintain output levels even as prices trade near the lowest since May 2009.

“The demand from alumina and aluminum continues to be quite strong,” Chief Executive Officer Graham Kerr told reporters on a conference call on Wednesday. “The challenge is more around the supply side where you have excess demand, especially smelting capacity that’s being created in China.”

A flood of aluminum exports from China depressed the market this year, forcing smelters worldwide to reduce output. While South32 suspended production at its processing facility in Brazil that is has with Alcoa Inc., operations in South Africa and Mozambique were profitable in the year ended June and are forecast to produce attributable output of more than 900,000 metric tons in the 2016 fiscal year, “marginally less” than a year earlier.

The group’s manganese mines in South Africa will remain closed until the completion of a strategic review, South32 said in a statement Wednesday. The company is the world’s largest manganese producer and owns a 60 percent stake in the Samancor venture with Anglo American Plc.

“We want to ensure that all our operations at this point in the cycle are able to break even,” Mike Fraser, president and chief operating officer for Africa, said during the call. “Managing cash rather than pushing volume which is not cash-generative is really important.”

Samancor will maintain sales through supplies from stocks, South32 said.

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