[Ferro-Alloys.com] It’s official, BHP Billiton is conducting a “strategic review” centering on its TEMCO operation in Tasmania. The manganese producer chose Citigroup Global Markets Australia to assist in the process. Interested parties were asked to register their interest with Citi no later than Nov. 9.Groote Eylandt Mining Company (GEMCO) owns 100% of the issued shares of TEMCO. BHP Billiton owns 60% of GEMCO with the remainder owned by Anglo American which is thought to have the right of first refusal for TEMCO.

 

The process, according to an insider, was planned in advance. “TEMCO was closed, restructured, restarted and is now up to capacity and profitable,” he said. “BHP is accessing the long-term fit within the company’s portfolio and testing the market is part of this process.”

 

The prospectus said TEMCO has fourfurnaces and one sinter plant with a capacity of 150,000 mtpy of high-carbon ferromanganese, 120,000 mtpy of silicomanganese, and 365,000 mtpy of high-grade manganese sinter of which about 285,000 mtpy are consumed by the furnaces.

 

The operation has low-cost power by industry standards, with fully variable pricing based on load consumed and not subject to take or pay provisions. An energy recovery unit also supplies about 8% of the power requirements. And, under the renegotiated power agreement, the cost is forecast to represent around 11% of the production costs in fiscal 2013.

 

Approximately 80% of TEMCO’s products are exported to more than 40 consumers in 10 countries across Asia and North America. The remaining 20% is supplied to the Australian and New Zealand steel markets.

 

TEMCO has the ability to turn furnaces on and off with a flexible configuration to alter product mix. Finally, TEMCO was temporarily closed in February, and cost savings were initiated.