CAPE TOWN, South Africa South African ferrochrome producers must cut operating costs to remain competitive in the face of steep power price increases, International Ferro Metals Ltd. (IFM) chief executive officer Chris Jordaan told AMM sister publication Metal Bulletin on the sidelines of Mining Indaba in Cape Town.
South African state-owned energy group Eskom Holdings SOC Ltd. has come under fire for its proposal to increase prices by 16 percent per year for the next five years.
"The electricity price increase probably wont be 16 percent in our view, but it wont be inflation either," Jordaan said Feb. 6.
"Thats the major contributing factor for competitiveness for ferrochrome producers in South Africa. The (ferrochrome) price is what it is, the question is how can we curb cost increase?" he asked. "From a competitive perspective, South African ferrochrome producers will have to be able to compete with the Chinese in the long run."
Producers have had some relief due to the weakening of the rand, which has helped offset increased production costs.
IFM has also reduced its own costs through its electricity cogeneration plant and UG2 chrome ore sourcing arrangement with Anglo American Platinum Ltd., which produces UG2 as a by-product.
"The rand-dollar exchange rate has moved in favor of ferrochrome producers in South Africa," Jordaan said.
"IFM has made major inroads in fixed costs; 15 to 18 percent of total ore comes from our UG2 agreement in which we only pay transport costs, thats where youre seeing a cost reduction," he added. "When both ferrochrome furnaces are at full capacity, 10 percent of our electricity is generated by cogen(eration)."
A version of this article was first published by AMM sister publication Metal Bulletin.