LONDON South African
ferrochrome producers seeking to extend power buyback
agreements with state power group Eskom Holdings SOC Ltd. are
approaching rivals for material to ensure their supply
contracts are covered, market participants told AMM
sister publication Metal Bulletin.
All South African producers have
cut production and sold the conserved power back to Eskom in
the latest round of power buyback deals reached in late
Ruukki SA and Hernic Ferrochrome
Ltd. are reportedly seeking material so that they will be in a
position to extend the furnace closures or cut additional
capacity, market sources said.
"Ruukki and Hernic are trying to
purchase the shortage (the capacity they would cut) from the
market to close furnaces," one market source said.
International Ferro Metals Ltd.
was said to be doing the same, but a company spokeswoman told
Metal Bulletin it was "not considering shutting
Most of the existing buyback
arrangements expire in March, but several producers want to
extend the arrangements until the end of May and some are
stocking up first.
Under the terms of the Eskom
deals, producers must fulfill contractual obligations and must
not declare force majeure or cut jobs as a result of
"I can confirm that (some
producers) have approached us for material to cover their
long-term sales contracts so they can sell the power instead,"
one ferrochrome supplier said.
Metal Bulletin reported
in January that Eskom was seeking to buy back more power amid
protracted concerns about a lack of generating capacity, which
has already led to blackouts in South Africa in recent
Xstrata Alloys confirmed March 1
that it is in discussions with Eskom to extend its deal until
the end of May.
Xstrata and joint-venture
partner Merafe Resources Ltd. agreed in December to cut
ferrochrome production by 100,000 tonnes from Jan. 1 through
March 31, 2013.
"The Xstrata-Merafe (pooling and
sharing venture) is in discussions with Eskom to extend the
current buyback deal to the end of May. We do not know at the
moment how many of our furnaces will be affected," an Xstrata
Alloys spokesman said.
Ruukki and Hernic declined to
A version of this article
was first published by AMM sister publication Metal