[Ferro-Alloys.com]Triple-listed diversified miner South32 has resumed manganese mining activity in South Africa and expects the reconfigured operation to increase its flexibility to respond to market demand.

 

Challenging market conditions saw the company extend its suspension of operations at Wessels and Mamatwan in November 2015, resulting in 32% decline in saleable manganese ore production to 1.22 million tonnes (Mt) during the nine months ended March 2016. A drawn down in supply chain inventory lessened the impact on sales which fell 25% to 1.35Mt. At the same time, the suspension of three of four high-carbon ferromanganese furnaces at Metalloys saw saleable alloy production decrease by 67% to 68kt. It will continue to operate only one of the furnaces until market conditions improve, the company said in a third quarter report dated April 21.

 

In anticipation of market demand, it has reconfigured its South Africa Manganese, ramping up production to an optimised 2.9 million tonnes (Mt) per annum. It expects first ore from its Wessels Central Block project in October 2016. The US $30million project will allow mining to be relocated closer to critical infrastructure and lower underground production costs.

 

The decision to suspend production in 22 pots and defer planned pot relining activity at its South Africa Aluminium business had little effect on saleable production. Thanks to fewer than expected load-shedding events in the March quarter, full-year production is expected to remain largely unchanged.

Similarly, its saleable energy coal production from South Africa is to remain in line with its full-year guidance of 31.95Mt, of which 16.65Mt is earmarked for domestic sales and 15.30Mt for export. The planned closure of its opencast mine and underground development at Khutala as well as a reduction in contractor activity elsewhere saw saleable production decrease by 7% to 24.1Mt during the nine months ended March 2016.

 

Despite the decline in overall production across most of the commodities it mines – including manganese, coal, aluminium, nickel and lead – South32 highlighted its strong balance sheet as a “key point of difference”.

 

“We continue to strengthen our balance sheet by focussing on value, not volume. We are making great progress on our cost-out programme across all operations and have continued to generate cash despite volatile commodity markets,” CEO Graham Kerr said.

 

It reduced its net debt by US$134 million and reported a cash position of US$18 million during the March quarter. South32 said it is also on track to meet its full-year production guidance for all of its operations and reduce controllable costs by US$300 million.

 

Johannesburg-traded shares in the company closed 2.05% higher at R18.88 per share on the news.

 

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