South32 Manganese Ore Output Falls 34% Amid Asset Reviewby
Assessment of South Africa joint venture is nearing completion
CEO says prepared to take more action amid weaker prices
South32 Ltd., the world’s largest manganese producer, said second-quarter output of the steelmaking ingredient fell by about a third after it halted mines and reviews operations to help weather the rout in commodities prices.
The strategic review of its South African manganese joint venture with Anglo American Plc to set new production targets is nearing completion, Perth-based South32 said Thursday in a statement. The company, which holds a 60 percent stake in the unit, said output from the Wessels and Mamatwan mines was suspended in November.
The collapse in prices of metals to energy on supply gluts and faltering demand in China, the biggest consumer, has pressed producers including Glencore Plc, Anglo American and Freeport-McMoRan Inc. to trim output and sell assets. The Bloomberg Commodity Index, a measure of returns from 22 raw materials, this week touched a 25-year low.
“In order to protect our strong financial position in the currently challenging environment we have already cut or suspended production,” at businesses including the South Africa manganese unit, aluminum operations in Brazil and South Africa and manganese alloy operations in Tasmania, Chief Executive Officer Graham Kerr said in the statement. “Further decisive action will be taken as we seek to maximize short-term cash flow while preserving longer-term value.”
South32 closed unchanged at 89 Australian cents in Sydney trading. The producer has declined 57 percent since it listed last May.
Manganese ore output fell 34 percent to 909,000 tons in the three months through December, from 1.4 million tons in the same period a year earlier, when the assets were housed with BHP Billiton Ltd, according to the statement. South32 was created last year in the mining sector’s biggest spinoff in about a decade, after BHP shed a collection of assets to focus on a smaller number of commodities.