BHP Billiton (NYSE:BHP) surprised the market this morning with good news by announcing it will restart its TEMCO manganese operations in Tasmania by the end of August.
In a statement released today, BHP said it believes the facility, which was making a loss over summer, is in conditions to return to profitability after identifying cost cuts.
The world's biggest miner suspended operations at the plant in February this year for three-months period to review TEMCO’s future.
"Thanks to the extensive investigation by TEMCO employees of these options, and the flexibility provided by several stakeholders, significant cost reduction opportunities have been identified, primarily in the areas of workforce efficiency, power supply flexibility, ore blending and freight optimization," BHP said.
The miner added “reduced organization structure will be implemented" through natural attrition, an employment freeze and redeployment.
BHP owns 60% of TEMCO in a joint venture with Anglo American.
The year for manganese
BHP’s decision is in line with a study published earlier this year, which claims 2012 may be the best for manganese producers, particularly for Asian countries.
The "Manganese: Global industry markets and outlook, 2012" report said the direction of manganese prices will depend on a combination of economic growth in the industrialized world, and continued expansion of industrializing and emerging economies in Asia and South America.
Recovery, particularly of the construction industries in Europe and North America, could lead to a firming of manganese ferroalloy prices in 2013 and beyond, says the study. This, coupled with continued infrastructural growth in China, India and elsewhere in Asia, should result in secure markets and rising prices for manganese. Expansion of Asian automobile industries will also stimulate manganese prices.