BHP Billiton (BHP) and South 32 (S32) still share a common shareholder base because of the spin-off of S32 earlier this year, and the slide in the share price of both companies in recent months is also a shared (but unwanted) experience.
BHP shareholders get their chance to vent in Perth today at the company’s Australian annual meeting. Yesterday it was the chance of South 32 shareholders to have a moan at the company’s first ever annual meeting, also in Perth.
South32 chairman David Crawford was forced to defend the weak share price performance of the company, telling the meeting it has been caught up in a “shakeout” of the mining industry. He warned that the poor market sentiment will continue.
South32 was spun out of BHP Billiton in May and the shares have has struggled ever since and sunk to a new low of $1.245 per share on Wednesday. That was despite predictions they would trade around $2. They in fact started trading at $2.13.
Still, BHP shareholders got the shares for nothing, so all they are complaining about (if they still hold them), is a lower value and not actual losses (though if you bought in may and June for the first time, you do have a complaint),
S32 1Y – South32 defends share price slump
Mr Crawford said the tough market conditions were a factor in that share price performance and were not likely to go away any time soon.
"South32, like the rest of the industry, is operating in a challenging environment. Our view is that market uncertainties are likely to persist for some time,” he told shareholders. "It has participated in the great shakeout that has occurred in the mining and minerals industry and the rest of the market over the last few months."
South32’s biggest exposures are to alumina, silver, nickel and coking coal, all of which are weak at the moment.
The company’s manganese business, which straddles Australia and South Africa, has been among the worst hit and the company this week closed several manganese mines in South Africa.
The mines closed on November 2 after a fatality on site, but South32 has decided to keep them closed until a review of the manganese business is completed in January.
That move follows the decision to delay the restart of 75% of the company’s manganese furnaces in South Africa in June.
Mr Crawford also revealed that South32 was reviewing its tailings dams in the wake of the Samarco tragedy in Brazil, which has rocked BHP and Vale over the past two weeks.
