South32’s association with the Tasmanian Electro Metallurgical Company (TEMCO) is set to come to an end after it agreed to sell its stake in the manganese alloy smelter to an entity within the GFG Alliance.

The announcement from South32’s Groote Eylandt Mining Company (GEMCO) said completion of the transaction was subject to approval from Australia’s Foreign Investment Review Board. Upon satisfaction of this condition, GFG will make a nominal payment to GEMCO to acquire 100% of the shares in TEMCO, it said, without naming an acquisition price.

As a condition to the completion of the transaction, the parties have entered into an ore supply agreement from GEMCO to TEMCO.

The smelter, in Tasmania, Australia, is run by the Samancor Manganese joint venture, owned 60% by South32 and 40% by Anglo American.

South32 says TEMCO uses ore shipped from its GEMCO operations in the Northern Territory of Australia and produces ferromanganese for steelmaking. Most of the alloy produced is exported to customers in Asia and North America, with the remaining sold to steel producers in Australia and New Zealand.

South32 CEO Graham Kerr said the agreement represented another milestone for South32 as it continues to reshape its portfolio.

“Today’s agreement follows an extensive review of options regarding the future of our manganese alloy business,” he said.

“The transaction and our ongoing supply of ore to TEMCO will see the smelter, first established in 1962, continue to operate into the future.

“Looking forward, we are confident that GFG, a current TEMCO customer, is well placed to operate the smelter, with the acquisition representing an opportunity to further vertically integrate its steel business.”

The transaction does not include the Samancor Manganese JV’s South African manganese alloy smelter, Metalloys, which has separately been placed under care and maintenance, South32 added.