LONDON Tata Steel KZN Pte has closed both ferrochrome furnaces at its plant in Richards Bay, South Africa, under a power buyback deal with state energy group Eskom Holdings SOC Ltd., according to market sources.
The furnaces are expected to be kept offline for two months, AMM sister publication Metal Bulletin understands.
Tata is the latest South African ferroalloys producer to agree to stop or reduce production and sell contracted electricity back to the national grid. Hernic Ferrochrome Ltd., Ruukki SA and Xstrata Plc are among those that have struck similar deals since Eskom started a second round of buyback negotiations in late 2012 amid concerns about lack of generating capacity.
Macquarie Group Ltd. estimated that the buyback deals could reduce total ferrochrome output by 300,000 to 500,000 tonnes gross weight, equal to 3 to 4 percent of annual global output.
Tata Steel KZN produces 150,000 tonnes of ferrochrome annually at Richards Bay from locally supplied ores, and exports the alloy to the United States, Asia and Europe, according to its website.
Tata declined to comment.
A version of this article was first published by AMM sister publication Metal Bulletin.