Picture: SUPPLIED
Picture: SUPPLIED

SHARES in South32 surged more than 11% in early morning trade on Thursday morning after the miner announced major restructuring plans for its South African manganese division, which included laying off 620 employees.

However, by 9.43am the share price had lost some of its initial momentum and was up 9.55% to R12.16 from Wednesday’s close.

The company expects pretax restructuring costs, including redundancies, to cost about $10m in the 2016 financial year.

Samancor Manganese is the joint venture between South32 and Anglo American and the world’s largest producer of manganese, largely used in the making of steel and aluminium. It has operations in SA and Australia.

Mining at the South African operations was halted in November 2015. South32 said on Thursday that mining would resume but at a substantially reduced rate with output 22% below capacity.

"When combined with the restructuring initiatives that are currently being finalised at many operations across our portfolio, we expect to further strengthen our financial position and increase our cash-generating capacity through the cycle," said CEO Graham Kerr.

South32, which was spun off from conglomerate BHP Billiton last year, said the restructuring was necessary due to the downward revision to forecast commodity demand and prices. The downward revision will result in a first-half impairment charge of $1.7bn when the company reports its interim results on February 25.