South32, manager of the Samancor Manganese JV, will delay the restart of three of the four high-carbon ferromanganese furnaces at its Metalloys manganese alloy operation in South Africa.
The decision follows a decline in high-carbon ferromanganese (HCFeMn) alloy prices of approximately 20% since the start of the 2015 financial year and is aligned with South32’s commitment to maximise per share financial performance, rather than volume. No permanent employees will be retrenched as a result of this temporary suspension.
Following this decision, the JV is engaging with Transnet to secure access to the necessary rail and port capacity required to export additional manganese ore from its South African mining operations; however, export volumes will remain dependent on market conditions.
South32 also confirms that a review of the fair value of its interest in the Samancor Manganese joint venture is currently underway. The process is expected to have implications for the fair value adjustment that is required pursuant to the conclusion of the amended and restated umbrella agreement governing the JV.
Samancor Manganese is the world’s largest producer of manganese with operations in South Africa and Australia. Its Australian operations include GEMCO, an open-cut manganese mine in the Northern Territory, ranked as the largest and one of the world’s lowest cost manganese ore producers, and TEMCO, a manganese alloy plant in Tasmania.
The joint venture’s African operations include the Hotazel Manganese Mines located in the Kalahari Basin in South Africa’s Northern Cape Province, a region that holds 80% of the world’s manganese resource endowment.
Its African operations also include Metalloys, a smelter that is integrated with the Hotazel Manganese Mines, creating an alternative logistical route for manganese into the export markets.
Metalloys, one of the largest manganese smelters in the world, is owned by Samancor Manganese, a 60:40 JV between South32 and Anglo American.
On 19 August 2014, BHP Billiton announced that it had agreed with Anglo American to make certain changes to the agreement which governs their interests in the Samancor Manganese JV. On completion, BHP Billiton subsequently discontinued consolidation of the manganese business and recorded its retained 60% interest at fair value.
South32 is the spin-off company which comprises BHP Billiton’s former African and Australian assets.