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BHP To Restart Tasmania Manganese Operations

05/22/2012 | 01:37am US/Eastern

--BHP to restart Temco manganese operations in Tasmania

--Cost cuts identified

--Temco's strategic fit to be considered

(Recasts 1st paragraph, adds details on the restart from 2nd, other sales plans in 7th.)

   By Robb M. Stewart 
   Of  
 

BHP Billiton Ltd.'s (BHP) loss-making manganese alloy operations in Tasmania secured a reprieve, with smelting set to resume after the mining company found areas in which to cut costs.

The mining company plans to have all four furnaces at the Tasmanian Electro Metallurgical Co. facility it jointly owns with Anglo American PLC (>> Anglo American plc) operating by the end of August, BHP said in a statement. Temco was suspended in March so the company could review its future against the backdrop of a strong Australian dollar, low manganese prices, and steady increases in costs for electricity and other items.

Bryan Quinn, president of BHP's Australian manganese assets, said costs would be reduced through improved workforce efficiency, flexibility in the power supply, and freight changes. Temco would also be freed from ties to BHP's mining operation in the Northern Territory, allowing it to blend in ore from other sources.

The headcount at Temco, which is located on the coast of Australia's southern island state, will be reduced through an employment freeze, natural attrition and the redeployment of some workers within BHP, the Melbourne-headquartered company said.

Temco is part of Samancor Manganese, a 60-40 venture between BHP and Anglo American that owns assets in Australia and South Africa. The Tasmanian operation began in 1962 and, when operating, produces roughly 65,000 metric tons of silico manganese and 240,000 tons of high-carbon ferro manganese a year.

"One of the key changes as we restart will be the operational separation of the Temco alloying facility from the Gemco mine," said Tom Schutte, president of BHP's manganese division, adding that the move would improve operating performance and allow BHP to consider the "strategic fit" of the Temco operations within the company's portfolio.

BHP last year said it was reviewing for possible sale its diamonds business, and earlier this year that it had exercised an option to sell its 37% interest in the Richards Bay Minerals heavy mineral sands venture in South Africa to partner Rio Tinto PLC (RIO).

-By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094; robb.stewart@dowjones.com

Stocks mentioned in the article : Anglo American plc, Anglo American plc
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