South32 rises on completion of production update
South32 rose 2.05% on the JSE on Thursday following the release of its production update, which showed that the strategic review it undertook on its SA manganese operations had been completed.
|||London - South32 rose 2.05 percent on the JSE yesterday to trade at R18.88 a share, following the release of its production update, which showed that the strategic review it undertook on its South African manganese operations had been completed and mining had resumed.
South32, which was spun off from BHP Billiton’s non-core assets last year, said it was on track to deliver $300 million (R4.3 billion) cost savings this year after the uphill battle with a drastic drop in commodity prices that necessitated the restructuring to ensure flexibility and efficiency.
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South32 halted operations at the Wessels and Mamatwan manganese mine operations in November as it grappled with tough market conditions, making more than 600 employees redundant.
In February, the company announced that it had taken a $1.3bn impairment charge on manganese assets from South Africa to Brazil. Yesterday the company said saleable ore production was down 32 percent to 1.22 million tons in the nine months to March as a result of a halt of the review.
Sales of manganese were down 25 percent as the supply chain inventory was largely drawn down. “Following the completion of a strategic review, mining at South Africa manganese mines recommenced in the March 2016 quarter,” the company said.
“The reconfigured operation will have greater flexibility to respond to market demand, having ramped up production to an optimised 2.9 million tons.”
The company said its $30m Wessels Central Block project would enable mining to relocate closer to critical infrastructure and lower production costs in the underground mine, with the first ore produced now anticipated in October.
It said South Africa’s manganese saleable alloy production was down 67 percent to 68 000 tons in the nine months to March, following the suspension of the four high carbon ferromanganese furnaces at Metalloys in May.
“Metalloys will continue to operate one of four furnaces until market conditions improve,” the company said.
It said its South African aluminium saleable production was unchanged in the nine months and quarter to March at 525 000 tons and 173 000 tons respectively. The company suspended 22 posts in September to achieve incremental improvement in cash flow by deferring planned pot relining activity.
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