Samancor (Pty) Ltd, which is owned 60 percent by Australian mining giant BHP Billiton and 40 percent by UK-based miner Anglo American Corporation, is rolling back its manganese production in South Africa and Australia due to the downturn in market conditions. Accordingly, in FY 2009 Samancor's manganese ore production is foreseen to decline by 21 percent, while its alloy production is expected to drop by 23 percent.
Samancor's reductions of manganese ore output are expected to be spread between GEMCO (Australia) and Hotazel (South Africa). Resources at these operations will be shifted to development and rebuilding of product inventories, which are severely depleted. Meanwhile, as regards Samancor's alloys production, furnace rebuilds are to be carried out earlier than previously planned at TEMCO (Australia) and Metalloys (South Africa). Certain of the furnaces at the latter two facilities are not expected to recommence operations until market conditions get better.
Due to the production cuts, it is expected that Samancor's manganese ore output capacity will decrease by 1.5 million mt to 5.5 million mt per year, while its alloy output capacity will drop by 170,000 mt to 555,000 mt.
Commenting on the production cuts, Billiton Chief Executive, Ferrous and Coal, Marcus Randolph, stated, "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."