MELBOURNE – Australia’s South32 Ltd expects base metals and coal prices to give up recent gains, inflcting more pain on debt heavy rivals who will eventually be forced to shut loss-making operations, its chief executive said on Thursday.
Spun off by BHP Billiton a year ago with little debt, South32 produces nickel, manganese, aluminium and coal, commodities that have all slumped over the past year due to oversupply and slowing growth in China.
Chief Executive Graham Kerr said the rebound in coal and metals prices during the current quarter is unsustainable, given that markets are still oversupplied. “I think there’s a little bit of pain still to come,” Kerr told Reuters in an interview.
South32 faces a strike this month over a pay dispute at its Colombian Cerro Matoso operation, one of the world’s largest producers of ferronickel, where a two-week strike last year forced BHP to declare force majeure.
Kerr said talks were continuing with workers at the mine, which is still losing money even after a round of job cuts over the past six months, but said the company hopes to avert a strike. “From our perspective, the starting position is not to have significant increases in awards and benefits and pay,” he said.
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