South32's decision to review the future of its manganese alloy assets comes as little surprise to fellow manganese alloy producers because they are likely to be considering similar options.
The review, which could result in the divestment of the assets, reflects a wider predicament affecting alloy producers struggling with historically high ore prices and a subdued market for their own product. South32 chief executive officer Graham Kerr said this month that changing dynamics in the manganese market have "reduced the attractiveness" of the company's exposure to the alloy market. Long-standing complaints from manganese alloy producers about shrinking profit margins intensified in late 2017 and into 2018. Chinese manganese alloy smelters started to stage strong resistance to manganese ore price spikes, prompting monthly meetings in China aimed at capping ore prices and keeping alloy prices steady. European producer Ferroglobe cut production in November 2018, just nine months after buying two alloy plants from trader-miner Glencore. The markets for both ore and alloy are prone to volatility, meaning profit margins can differ greatly in relatively short periods of time. But snapshots...