Billiton Could Cut Aluminium Yield

JOHANNESBURG (Business Day) -- Aluminium has been hit by lower global demand for cars as slowing economic growth hits consumer spending in major markets. The metal fell to $1,478/ton this week, its lowest level since October 2003, reflecting a rise in stocks to their highest level since late 1994, according to Reuters. “There is no doubt that these are very challenging times, and uncertainty in the shorter-term outlook remains,” BHP Billiton spokesman Illtud Harri said in reply to a question about Billiton’s plans for its aluminium operations, especially in South Africa (SA). “Whilst we won’t comment on individual commodities in our portfolio, there is no doubt that we, like every other resources company, will not be immune from the effects of the global market conditions.” BHP Billiton operates two aluminium smelters in SA, at Hillside and Bayside near Richards Bay, and has a 47% stake in a third, Mozal, in Mozambique. It also has alumina refineries and bauxite mines in Australia, Brazil, Guinea and Surinam. Last week, the group said it would cut production of manganese ore and alloys in SA and Australia, and its joint venture with Vale in Brazil, Samarco, has announced a cutback in iron-ore pellet production. Manganese and iron ore are feedstocks for the steel industry. Billiton dropped its hostile bid for Rio Tinto, the world’s biggest aluminium producer, late last month, citing deteriorating market conditions and debt spreads in the short term, although it reiterated its long-term confidence in the resources sector. Yesterday, Rio Tinto said it would reduce net debt by $10 billion by the end of next year by eliminating 14,000 jobs globally, including 8,500 contractors, cutting $5 billion in costs and selling assets or bringing in joint venture partners. Asked about the possibility of job cuts in SA, Rio Tinto GM, communications, Jean Chawapiwa-Pama said the group was not giving out specific information about job cuts or projects affected at this stage. It would do so early next year. Rio Tinto reiterated its conviction that the industrialisation of developing economies with large populations would support higher levels of metals and minerals demand worldwide in future. “The purpose of these measures announced today is to ensure that the group is well positioned to exploit this underlying trend when the global economy recovers.”