Johannesburg, South Africa — MININGREVIEW.COM — 04 December 2009 – Hernic Ferrochrome “’ a South African-based unit of Mitsubishi Corporation “’ says it may cut output early in 2010 if power utility Eskom implements a high tariff, and also because of expected lower Chinese demand for the metal.
South Africa is a leading producer of ferrochrome, but the global crisis has seen a downturn in consumption by that sector.
Hernic said the industry was preparing for a decline in Chinese demand for ferrochrome. The company operates four furnaces in South Africa, and has an annual ferrochrome capacity of about 390 000 tpa.
CEO Tetsu Kotaki told Reuters in an interview that prices of ferrochrome were also expected to drop due to the expected lower demand. “We are very carefully reviewing the markets at this moment. Should further deterioration take place, we may have to think about some cut-back of our production, not this year but sometime in the first quarter of next year,” he said. He did not say how much output could be scaled back.
Kotaki said a higher tariff raise by Eskom could force the company to shut down one of its furnaces, or reduce the power load and ultimately cut output at all the furnaces.
“We may think about some adjustment of production when electricity tariffs are high. We need to work out some sort of plan; we will respond to any change in the market, but we will have to be very strategic,” Kotaki explained.