BHP Billiton Considers Halting Bayside Aluminum Smelter

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."

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