BHP Billiton to phase out Standard Bank business

By Marius Bosch

JOHANNESBURG (Reuters) - Mining group BHP Billiton Ltd/Plc (BHP.AX: Quote, Profile, Research) (BLT.L: Quote, Profile, Research) will phase out business with Standard Bank Group (SBKJ.J: Quote, Profile, Research) in the first corporate spat brought on by South Africa's power crisis.

BHP, the world's biggest mining group, had carried out annual business worth more than 2.4 billion rand ($300 million) with Standard Bank, BHP Billiton's South African chairman Vincent Maphai said in a letter to employees.

The letter, seen by Reuters, said a senior Standard Bank executive had recommended at a meeting between business and the government that BHP Billiton's Hillside aluminium smelter be shut down to free up more electricity.

South African mining groups have been struggling to cope with only 90 percent of their usual power after a national power crisis forced the closure of mines for five days in January.

BHP Billiton said on March 11 it would halve operations at its Bayside smelter, while Hillside in South Africa and Mozal in Mozambique would operate on 90 percent of their power needs.

"In that context, and given his apparent ignorance of the issues at hand, we believe that Standard Bank's remarks were reckless, provocative and irresponsible," Maphai said in the letter.

BHP spokeswoman Bronwyn Wilkinson confirmed that the mining group will seek other banking partners. "I can confirm that BHP Billiton has taken a corporate decision to phase out its business with Standard Bank," he said.

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