A steep fall in manganese prices has contributed to manganese and nickel miner Consolidated Minerals" $6.5 million loss

Consolidated Minerals managing director Rod Baxter says that on an operating level the manganese price drop has affected the company"s profit.

"In March 2005, the company received manganese prices as high as US$4.17/dmtu compared with the long term benchmark price of US$2.20/dmtu, driven by increased alloy production in China , leading to tightening in global supply and price spikes in alloy and ore," Rod Baxter says.

"Subsequent alloy oversupply and increase in ore stockpiles in China led to a fall in the ore prices we received to as low as US$2.11/dmtu in May 2006.

"In revenue terms, the fall in manganese prices cost us $80 million. This negative impact was partially offset by a 46% increase in manganese production but overall manganese revenue was still down to $120 million from $147 million in FY05.

"The good news is that since May this year we've seen the manganese market stabilise, with the oversupply having corrected, and our sales in recent months showing some improvement in prices, Rod Baxter says.

In recent weeks, Consolidated Minerals has been conducting a comprehensive of its business strategy and focus. The company's vision is to become a premier Australian mining house.

The company has three main priorities - expansion of the existing nickel and manganese business, further diversification and growth through exploration and acquisition, and cost reduction.

"First, we will grow our existing nickel and manganese operations. At our Kambalda nickel operations in Western Australia , production will increase from the 4445 nickel tonnes produced in the 2006 financial year to our forecast range of 6000 to 6400 tonnes in 2007 financial year reaching 15,000 tonnes within three to five years.

"We'll do this by completing the East Alpha development and by bringing on new production at the southern extensions of both East Alpha and Beta Hunt (at Kambalda nickel operations in Western Australia ) and new production from our Widgiemooltha assets in Western Australia , acquired under the recent Titan acquisition.