By Alex MacDonald
LONDON--Mining titan BHP Billiton Ltd (BHP) said Monday that it
has begun a formal consultation with its employees to cease
smelting activities at its ailing South African Bayside aluminum
smelter.
Aluminum producers have been cutting back on production over the
past year due to depressed aluminum prices stemming from excess
production capacity, particularly in China. Rival Rio Tinto PLC
(RIO) said in November it would suspend an alumina refinery in
Australia due to weak market conditions while U.S.-based Alcoa Inc
(AA) announced last week plans to permanently shut down two
potlines at an aluminum smelter in New York. Alumina is a
semi-finished product used to make aluminum.
BHP didn't provide a timeline for when the consultation period
would end but BHP's South Africa Vice President of Communications
and Stakeholder Relations Lulu Letlape said "We are focused on
mitigating the impact of potential job losses while ensuring the
existence of a sustainable aluminum business in Richard's Bay."
BHP intends to shut the plant's smelting activities but keep the
facility's cast house operational. BHP will supply material from
BHP Billiton's neighboring Hillside smelter to the cast house while
it assesses future options, the company said.
The Bayside aluminum smelter employs 450 people and is able to
produce 97,000 metric tons of aluminum annually. Analysts at
Investec Securities said in a note that the "closure would have a
small positive impact on the aluminum market."
Write to Alex MacDonald at alex.macdonald@wsj.com
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