Melbourne - South32, 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 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, CEO Graham Kerr said in the statement. “Further decisive action will be taken as we seek to maximise short-term cash flow while preserving longer-term value.”
South32 rose 2.3 percent to 91 Australian cents at 11:01 a.m. in Sydney trading, trimming its decline to 56 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, 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.
BLOOMBERG