South32 Announces Overhaul of South African Manganese Assets

South32 Ltd. (ASX:S32,LSE:S32) announced the results of a strategic review of its South African manganese assets, noting that it plans to “substantially reduce cash costs at a number of operations.”
Specific measures that the company plans to take include:

• The reduction of approximately 620 employees across the joint venture;
• The acceleration of the second phase of the Central Block development project at Wessels (US$19M budget, South32 share) 5, which will enable mining to relocate closer to critical infrastructure and reduce cycle times;
• A 36%1 reduction in saleable production at the Wessels mine to 740ktpa (100% basis);
• The optimisation of the mining and processing footprint at Mamatwan, where saleable production will be reduced by approximately 18%1 to 2.2Mtpa (100% basis); and
• The continued operation of only one of four furnaces at the Metalloys smelter, which is now generating free cash flow.

Graham Kerr, CEO of South32, commented:

The completion of the South Africa Manganese strategic review is important for our Company as it will allow us to re-base manganese ore production at a significantly lower level while reducing Rand denominated mine gate costs by a commensurate amount. When combined with the restructuring initiatives that are currently being finalised at many operations across our portfolio, we expect to further strengthen our financial position and increase our cash generating capacity through the cycle.
We will continue to focus on the things that we can control; safety, volume, costs and capital expenditure, as we seek to optimise the performance of our operations. This strategy to maximise value rather than volume, our high quality operations and well-defined financial policies underpin our resilience at current commodity prices and we remain exceptionally well positioned for any improvement in industry fundamentals.
We are, however, not immune to external influences and the significant change in the outlook for commodity prices is expected to result in non-cash charges of approximately US$1.7B when we report our December 2015 half year financial result.

Click here to read the full South32 Ltd. (ASX:S32,LSE:S32) press release.