Billiton’s Smelter Output Hit By Power Shortages

Restricted electricity supply to BHP Billiton’s South African aluminium smelters continued to take a toll on production in the September quarter, the group reported. JOHANNESBURG (Business Day) -- Improvement in transport infrastructure to its manganese mines in Northern Cape helped to boost output of manganese ore substantially. Billiton said attributable production from its Hillside aluminium smelter dropped slightly to 175,000 tons in the September quarter compared with 178,000 tons in the same period a year ago. But production at the Bayside smelter, where two potlines have been closed, almost halved to 25,000 tons from 48,000 tons. At 47%-owned Mozal in Mozambique, attributable aluminium production was almost flat year on year at 64,000 tons. At the same time, attributable saleable production of manganese ore in South Africa (SA) rose 62% to 929,000 tons from 572,000 tons. Billiton said this reflected an improved performance from the Hotazel mine and improved rail and port capacity. Output of manganese alloys was also higher at 133,000 (2007: 123,000) tons, despite the 10% cut in power supply and load shedding in SA. Production of energy coal from SA dropped to 9-million tons from 11.7-million tons — with the reduction in export — rather than domestic, coal after Billiton sold its Optimum colliery last year. A Billiton spokesman said excluding Optimum, SA coal production was in line with last year and 8% higher than it was in the June quarter, mainly because of increased underground production from Khutala and buy-ins of coal to support demand from Eskom. Billiton said its two developing coal projects in SA, the $450 million Klipspruit and the $975 million Douglas-Middelburg Optimisation, were on track. Klipspruit will start production in the second half of next year, aiming for an annualised 1.8-million tons of export thermal coal and 2.3-million tons of domestic thermal coal. The Douglas-Middelburg Optimisation, which is a replacement project, will come on stream in mid-2010, producing 10-million tons of export thermal annually and 8.5-million tons of domestic thermal coal. Aluminium was trading at $2,057/ton recently, close to a three-year low, on fears of rising stocks. Coal exported through Richards Bay fell to a six-month low of $104/ton on average this week, according to McCloskey figures reported by Bloomberg, because of weaker European demand. Manganese prices are not generally disclosed. Simon Toyne, of Numis in London, said the key to the performance of shares such as Billiton was whether their prices reflected expectations of weak economic conditions next year.