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BusinessLive reports that diversified miner South32, which was unbundled from BHP in 2015, is reviewing its manganese alloy smelter, as analysts warn that SA’s soaring power prices are making the sector uncompetitive.
The Metalloys smelter in Meyerton is one of the largest in the world and employs 300 people. “We continue to review options for our manganese alloy smelters as changes in market dynamics have reduced the attractiveness of our exposure,” the Australia-based miner said in a report for the three months ended June. Though no final decision has been made on the way forward, the review process could potentially result in South32’s divestment from the smelter or even its closure. Macquarie’s Grant Sporre commented as follows: “It’s difficult to compete with China Inc, where at this point power prices are not likely to be under as much pressure and where China has the economies of scale in their industry to be more efficient. For South32 the value that these smelters add is limited and they can simplify the business.” The costs of electricity will also be a key determinant for the future of South32’s Hillside Aluminium smelter in Richards Bay. Hillside’s power contract with Eskom is up for negotiation and the company has warned it needs a good contract if the operation is to be sustainable.
- Read the full original of Lisa Steyn’s report on the above at BusinessLive
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