Johannesburg, South Africa — MININGREVIEW.COM — 04 August 2010 – The Xstrata-Merafe chrome joint venture is to invest nearly R1 billion in a new pelletising and sintering plant which will be built at the group’s Rustenburg ferrochrome operation.
Merafe’s 20.5% share of the cost will amount to R190 million, and the new plant is expected to be fully operational by 2013, according to Merafe CEO Stuart Elliot, who said it would be funded from current and future cash flows.
The new plant – named Tswelopele – follows the successful construction of a similar plant called Bokamoso that was commissioned at the Wonderkop smelter in 2007. Tswelopele will take chrome ore fines which cannot be fed into a ferrochrome smelter and convert them into pellets which can be smelted.
Elliot said the pelletising plant would result in a slight increase in ferrochrome production capacity, but pointed out that the JV was not increasing its smelting capacity at this stage.
Elliot took over as CEO from Steve Phiri at the end of March, when Phiri was appointed CEO of Royal Bafokeng Platinum.
Elliot commented that the JV had to be satisfied on three issues before it committed to further ferrochrome smelting expansion. These were a consistent electricity supply from power utility Eskom, a favourable and sustainable outlook on ferrochrome prices, and sustainable, attractive profit margins.
Asked for his view on Eskom’s ability to supply power over the next few years and how this might affect expansion plans, Elliot replied: “The Eskom situation is tight and we are adopting a wait and see attitude.”
Elliot said he expected stainless steel production to drop in the third quarter of 2010, but then recover during the fourth quarter and through into 2011.
He forecast demand for ferrochrome would show the same trend because of conditions in the stainless steel market, and also because of the lack of any new ferrochrome capacity coming on stream in the immediate future.