Johannesburg, South Africa — 27 June 2012 – The Xstrata-Merafe chrome venture has been cut down to operating at half of its capacity as higher power costs and mining inflation eat steadily into its margins.
Reuters reports that in a statement issued here, Merafe Resources – which holds an equal 50% stake in the venture with Swiss-based diversified mining group Xstrata – said it would be operating only eight out of 20 furnaces between June and August, South Africa’s winter months.
“Ferrochrome production for the winter months is envisaged to be in the region of 40 to 50% of installed capacity,” the statement added.
In March this year the ferrochrome producer revealed that it had struck a deal with state-owned power utility Eskom to shut seven of its furnaces until the end of May and to allow Eskom to buy back the energy that the plants would have otherwise consumed. Those shutdowns were expected to have cost the company 130,000t of production in the first and second quarters.
The joint venture’s total ferrochrome production in 2011 was 263,000t, which represented 65% of installed capacity.
Source: Reuters Africa. For more information, click here.