South32 (ASX:S32) is likely to cull staff at its Groote Eylandt Mining Company (GEMCO) manganese mine in the Northern Territory.
GEMCO has begun consultations with staff after the manganese mine has suffered from years of flooding impacts and heightened production costs.
In March 2024, both the mine site and the island it is located suffered from Tropical Cyclone Megan.
This natural disaster event, multiple wet seasons, and groundwater seeping into mining pits have all contributed to the unsuitability to continue operations at GEMCO.
As costs have risen more than 80% in recent years, it is believed that South32 needs to cut $129 million from the business in response.
To subside water damage at the manganese mine, GEMCO already intends to spend around $100 million on new water infrastructure in the next two years.
This pledge for water infrastructure requires regulatory approvals to move forward.
In a statement provided to Mining.com.au, a South32 spokesperson says the company is focused on strengthening long-term viability through upcoming changes.
“GEMCO has completed an internal review in response to a more challenging operating environment and increased cost pressures and has begun implementing changes designed to strengthen the long term sustainability of the business,” the South32 spokesperson says.
“The review forms part of a program focused on improving structures, systems, and processes and ensuring GEMCO is well positioned to operate successfully into the future.”
GEMCO confirms that it has reviewed workforce requirements as a part of this review. The company has commenced consultation with employees and contractors who may be impacted by these changes.
“This is not something we take lightly, and our priority is to support affected employees through the process, including exploring redeployment opportunities where possible,” the spokesperson adds.
“These changes are necessary to ensure GEMCO remains sustainable and can continue to provide economic and social benefit to the community and the region while creating a strong long-term legacy for the Anindilyakwa people.”
GEMCO’s operations are located on an island in the Gulf of Carpentaria, producing 1.106 million wet metric tonnes of manganese ore in the 2025 financial year.
It is an open-cut, strip-mining operation which is described as “one of the largest manganese ore producers in the world”.
South32 owns 60% of GEMCO, while Anglo American (LSE:AAL) holds the remaining 40%.
Write to Maddison Elliott at Mining.com.au
Main Image: South32
