BHP Billiton today announced that it is temporarily cutting manganese production at its 60 per cent owned Samancor (Pty) Ltd operation due to weak market conditions. The cuts are expected to reduce ore production by 21 per cent and alloy production by 23 per cent for FY2009.
The reduction in manganese ore output is expected to be balanced between GEMCO (Australia) and Hotazel (South Africa). Resources at both these operations will shift to development and re-building product inventories, which are severely depleted. The reductions are expected to reduce ore production by 1.5 million tonnes in FY2009. Samancor's current total output capacity is 7.0 million tonnes of ore per annum.
In relation to alloy, furnace rebuilds will be brought forward at TEMCO (Australia) and Metalloys (South Africa). In addition, certain of these furnaces are not expected to restart until market conditions improve. We expect to reduce alloy production by 170,000 tonnes in FY2009, from a current output capacity of 725,000 tonnes per year.
BHP Billiton Chief Executive, Ferrous and Coal, Marcus Randolph, said: "We said on 22 November that global market conditions were proving challenging for the steel industry and its raw materials providers. Manganese ore and alloy are entirely dependent on the carbon steel industry and are therefore directly impacted by the current weak steel markets.
"We will continue to monitor the situation and when we see a recovery, given we are bringing forward essential major maintenance projects, we expect to be well placed to restart our full production alloy capacity. In ore, the development activities and rebuilding of depleted stocks will also allow us to react quickly to any recovery in the market."
BHP Billiton's 40 per cent partner in Samancor is Anglo American Corporation.