Johannesburg — WEAK conditions in the global steel industry have hit BHP Billiton, which announced yesterday it would cut back on production of manganese in SA and Australia.

The announcement follows shutdowns of ferrochrome furnaces in SA. Producers are cutting ferrochrome capacity by 50% or more in response to lower demand from steel makers.

SA is the biggest producer of ferrochrome and the second-biggest producer of manganese in the world, according to Chamber of Mines figures.

Samancor, which is 60% owned by Billiton and 40% by Anglo American, would reduce production of manganese ore equally in SA and Australia by a total of 1,5-million tons in the current financial year, it said. Samancor's total ore capacity is 7-million tons a year.

Production of manganese alloys would also be cut, by 170000 tons in the current year out of total annual capacity of 725000 tons a year.

"We said on November 22 that global market conditions were proving challenging for the steel industry and its raw materials providers," BHP Billiton ferrous and coal CE Marcus Randolph said.

"Manganese ore and alloy are entirely dependent on the carbon steel industry, and are therefore directly impacted by the current weak steel markets."

He said the situation would be monitored. Samancor would be able to bring production back on stream very quickly.

Jan Steenkamp, CE of African Rainbow Minerals' ferrous division, said Assmang was not cutting back production yet.

"Obviously the market is in decline, but we had a bumper year last year and sold everything in stock. We will continue to run our mines to restore stock levels. In the middle of January we will review the situation."

Steenkamp said the spot price of manganese -- which was not what Assmang was realising for its product as it sold on contract -- peaked at about $18/manganese unit, and was now about $11-$12/unit. Prices varied according to how and where the product was being sold, so it was hard to pinpoint movements, he said.