South32’s Australian operations include the Illawarra metallurgical coal mine, Worsley Alumina and the Australia Manganese operation made up of the GEMCO mine in the Northern Territory and TEMCO manganese alloy plant in Tasmania.

The company also expects to post pre-tax, non-cash charges of about $US1.7 ($A2.4) billion in its December 2015 half-year financial results.

In a February 4 announcement to the Australian Securities Exchange, South32 said its teams were “finalising plans that will deliver a meaningful reduction in costs at Illawarra metallurgical coal, Cerro Matoso [a Colombian nickel mine and smelter], Worsley Alumina and Australia Manganese.

“These initiatives are expected to result in a substantial reduction in employee numbers during the remainder of FY16 and will be detailed in our December 2015 half-year financial results,” it said.

That half-year financial is due out on February 25.

South32 had been focusing on its South African manganese operations in response to the steep decline in manganese ore and alloy prices.

The company is 60% owner of the world’s largest manganese business the Samancor Manganese Joint Venture.

Also in response to the price declines South32 stopped mining at the Hotazel Manganese Mines in South Africa in November.

That removed about 700,000t of manganese ore production from the global supply chain and inventories at the Hotazel mines have dropped substantially as a result.

With the strategic review done, mining activity is restarting at the South African manganese operations, albeit at a substantially reduced rate and with greater flexibility.

Subject to market conditions the Hotazel mines will ramp-up to a saleable production rate of 2.9 million tonnes per annum – about 900,000tpa short of what they have been doing.

Optimised mine plans, redundancies and other restructuring efforts are expected to reduce rand denominated mine costs. South32’s share of annual sustaining capital spending is also expected to fall 80% to $US7 million.

Specific measures being taken to reposition the South African manganese business include:

• Cutting about 620 employees across the joint venture;
• Accelerating the second phase of the Central Block development project at Wessels, which will move mining closer to critical infrastructure and reduce cycle times. South32’s share of that project’s budget is $US19 million;
• A 36% reduction in saleable production at the Wessels mine to 740,000tpa;
• Optimising the mining and processing footprint at Mamatawan where saleable production will be reduced about 18% to 2.2Mtpa; and
• Continuing to operate just one of the four furnaces at the Metalloy smelter, which is now generating free cash flow.

South32 expects its share of the pre-tax restructuring costs, including redundancies, from these steps will be about $US10 billion.