A rare ray of sunshine has penetrated the gloom gripping the global mining and steel industries, with the unexpected reprieve of BHP Billiton’s TEMCO manganese alloy plant in Tasmania.
A “review” more often than not spells the death or the sale of an operation. But having suspended production at the loss-making TEMCO three months ago while it evaluated its viability, BHP has now announced plans to restart all four furnaces by August.
The group is not guaranteeing the future of the Bell Bay plant. But it is comfortable that changes agreed with staff and the Tasmanian Government will provide breathing space in which TEMCO can return to the black and prove its worth to BHP.
The changes include a more flexible — read cheaper — power deal with Hydro Tasmania and a minimum 9 per cent reduction to the 300-strong permanent workforce. BHP has also unshackled TEMCO from its ore supplier, BHP’s flagship Australian manganese mine at Groote Eylandt in the Northern Territory, opening the way for the smelter to source and blend ore from the mining giant’s manganese mines in South Africa.
Unlike other minerals commodities, the market for manganese has turned in BHP’s favour since the suspension, adding 5 per cent in three months, despite a recent pull-back.
Management says the combination of the price improvement and the initiatives announced yesterday will generate “significant” cost savings that should enable TEMCO to regain its “globally competitive position”.
BHP owns 60 per cent of TEMCO in partnership with Anglo American. Some 75 per cent of the smelter’s production is exported to about 50 customers.
Investment in new deal
Michael Fotios’s Investment syndicate isn’t letting grass grow under its feet, re-emerging at the heart of a recapitalisation of the moribund Redbank Copper.
The recapitalisation has been a long time coming given share trading in Redbank was halted six months ago. The proposals include a $5 million equity raising at half a cent a share and the reassignment of part of Stirling Resources’ 29.5 per cent holding in Redbank to Stirling’s parent, Austria’s DCM DECOMetal.