Miner South32 flags $1.7b writedown, South Africa job cuts

GMT 09:43 2016 Thursday ,04 February

Arab Today, arab today Miner South32 flags $1.7b writedown, South Africa job cuts

Mining giant BHP
Sydney - AFP

Mining giant BHP Billiton's South32 spin-off Thursday announced $1.7 billion in asset writedowns and said it would axe hundreds of jobs at a South African facility and slash costs and production as commodity prices dive.

Miners across the world have seen their bottom lines sag as prices for key metals tumble, with even the bigger players slashing costs to maintain profit levels.

"We are... not immune to external influences and the significant change in the outlook for commodity prices," South32 chief executive Graham Kerr said in a statement.

Perth-headquartered South32, which operates assets including aluminium, coal, nickel, manganese, silver, lead and zinc after it was hived off from BHP into an independent firm last year, is due to report earnings on February 25.

It said the dire outlook for commodity prices after recent plunges meant it expected to book $1.7 billion in pre-tax, non-cash charges.

It will also cut 620 positions and reduce production in its South Africa manganese division, while annual capital spending will be slashed by 80 percent to $7 million for the 2017 financial year.

In addition, Australian job cuts were expected to be announced later this month.

"We are not in unfamiliar territory," Fat Prophets resources analyst David Lennox told AFP.

"It's going to be a terrible reporting season for resources companies across the globe... certainly net profits are going to be well and truly knocked around, revenue will be well and truly knocked around," he said.

Shares in South32 jumped 12.11 percent in midday trade to Aus$1.06 however, with mining companies boosted by the sharp fall in the greenback over concerns about the US economic outlook.

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