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BHP slashes manganese output 

WEAK market conditions in the steel industry have forced the world’s largest miner, BHP Billiton, to temporarily cut manganese production at its Samancor operation, which is expected to reduce ore and alloy output by 21% and 23% respectively for the 2009 financial year.

BHP Billiton chief executive ferrous and coal Marcus Randolph said global market conditions were proving challenging for the steel industry and its raw material providers.

“Manganese ore and alloy are entirely dependent on the carbon steel industry and are therefore directly impacted by the current weak steel markets,” he said.

“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 allow us to react to any recovery in the market.”

The reduction in manganese ore output is expected to be balanced between Groote Eylandt Mining Company (GEMCO) and Hotazel with resources at both operations to be shifted to development and rebuilding product inventories.

Ore production at Samancor, which has total output capacity of 7 million tonnes of ore per annum, is expected to fall by 1.5Mt in the 2009 financial year as a result of the reductions.

In relation to alloy, furnace rebuilds will be brought forward at TEMCO and Metalloys with certain furnaces not expected to restart production until market conditions improve.

Alloy production is expected to be reduced by 170,000t in 2009 from a current output capacity of 725,000tpa.

BHP owns 60% of the Samancor operation, while Anglo American Corporation owns the balance.

The news comes after Xstrata made further reductions in ferrochrome production in South Africa, bringing total suspended capacity to 906,000t or 52% of annual operating capacity.

A further five furnaces have now been suspended, representing around 406,000t of annual ferrochrome production capacity and reducing 2008 ferrochrome production by a further 50,000t.

Shares in BHP have gained $1.41 to $28.44 in morning trade.