LONDON (ShareCast) - (ShareCast News) - Shares in South32 spiked higher after the miner decided to cut costs and production at its South Africa manganese operations, with 620 jobs axed and an expected 0.9m tons (Mt) removed from the market.
The company, which was spun out of BHP Billiton last May, said that as a result of its write-downs of forecast commodity demand and prices, it now expects to book pre-tax, non-cash charges of approximately $1.7bn in the half-year to December 2015.

Moreover, S32 said it had also begun to look at cutting costs by a "meaningful" amoung at its Illawarra Metallurgical Coal, Cerro Matoso, Worsley Alumina and Australia Manganese projects.

After the strategic review of the 60%-owned Samancor manganaese joint venture with Anglo American, the largest in the world, S32 said it had decided to "maximise value rather than volume".

Mining will restart at with immediate effect, but at a substantially reduced rate and with greater flexibility, with the Hotazel mines ramping up to a saleable production rate of 2.9Mtpa.

This will cut 23% of saleable production from the global market "for the foreseeable future".

In 2017 S32's annual sustaining capital expenditure is expected to decline by approximately 80% to $7m, as the newly optimised mine plan, the redundancies and other restructuring cut rand-denominated mine gate costs "by a commensurate amount".

Chief executive Graham Kerr said: "The completion of the South Africa Manganese strategic review is important for our company as it will allow us to re-base manganese ore production at a significantly lower level while reducing Rand denominated mine gate costs by a commensurate amount.

"When combined with the restructuring initiatives that are currently being finalised at many operations across our portfolio, we expect to further strengthen our financial position and increase our cash generating capacity through the cycle."

Shares in South32 rose 13% to 53.25p by noon on Thursday.

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