South32 announces restructuring initiatives at Australian and Colombian mines

24 February 2016 (Last Updated February 24th, 2016 18:30)

BHP Billiton subsidiary South32 has announced a series of restructuring initiatives that will reset the cost base of its operations at Worsley Alumina, Illawarra Metallurgical Coal, Australia Manganese and Cerro Matoso.

BHP Billiton subsidiary South32 has announced a series of restructuring initiatives that will reset the cost base of its operations at Worsley Alumina, Illawarra Metallurgical Coal, Australia Manganese and Cerro Matoso.

At its Worsley Alumina operation, the company is planning to reduce 390 employees and contractors before the end of FY16, in addition to reorganising mining and refining into two operations.

The company also plans to optimise the coal to gas fuel mix in the co-generation power facility and reduce 34% in sustaining capital expenditure to around $41m in FY17.

"The initiatives that we have announced today across our Australian and Colombian operations are central to our strategy."

South32 CEO Graham Kerr said: "The initiatives that we have announced today across our Australian and Colombian operations are central to our strategy.

"Operating unit costs, including sustaining capital expenditure, will move sharply lower at our Illawarra Metallurgical Coal, Cerro Matoso and Worsley Alumina operations, mitigating cash outflows and solidifying their position at the low end of industry cost curves.

"In addition, the reconfiguration of our leading Australia Manganese mine, GEMCO, will ensure that it becomes a positive contributor to free cash-flow at current prices."

South32 plans to reduce at least 300 employees and contractors at its Illawarra Metallurgical Coal operation before the end of FY16.

The mine reduced its employee and contractor headcount by 100 and operating unit costs by 34% over the 18 months to the end of December 2015.

South32 anticipates pre-tax restructuring costs, including redundancies, of around $10m at Illawarra in the first half of 2016.

The company will also lose 82 employees and contractors at its Australia Manganese operation and at least 350 employees and contractors at its Cerro Matoso operation before the end of FY16.