Merafe’s Boshoek
ferrochrome smelter
in the North-West
Johannesburg, South Africa — 02 April 2012 – The Merafe-Xstrata’s chrome joint venture will temporarily shut down another two of its 20 furnaces in an extension of its power buy-back deal with Eskom, losing an additional 30,000t in production over the next two months.

Merafe Resources “’ through its wholly owned subsidiary, Merafe Ferrochrome & Mining (Pty) Limited “’ is a partner with Xstrata South Africa (Pty) Limited in the Xstrata-Merafe Chrome Venture “’ the world’s largest ferrochrome producer.

Miningmx reports that the additional two closures will be at the venture’s Wonderkop and Lydenburg smelters, and will last until 31 May. As a result, a total of seven of the venture’s 20 furnaces would be closed until that time, following an announcement in February that four furnaces at Rustenburg and another one at Wonderkop would be kept out of action.

“The additional two temporary furnace closures will have a net positive economic impact for both the venture and Eskom, and will not result in job losses at these two furnaces,” noted a Merafe statement.

The total loss in production from the closures is estimated to be 130,000t.

Eskom has made similar deals with Ruukki, International Ferro Metals and Samancor in a bid to create sufficient margin on its power grid while it takes power stations offline for maintenance work.

Eskom is using the buy-back scheme to source allocation at a higher rate than these users would have paid for supply, but less than the cost of generating electricity with gas turbines.

Eskom CEO Brian Dames said earlier this year that it cost the parastatal 38c for a standard power station to generate a unit of electricity, while power produced by the open-cycle gas turbines cost close to R1.40 per unit.

Eskom spokesperson Hillary Joffe told Miningmx the power utility had already secured 800MW so far in savings from heavy users. It was looking for savings of 3,000MW across the economy. “Our agreements are based on the companies not losing jobs and being able to deliver to their customers,” she said.

Source: Miningmx. For more information click here.