The down cycle in the global ferrochrome market appeared to be bottoming, with recent experience indicating that the current 69c/lb ferrochrome price might not decline further, International Ferrochrome Metals (IFM) CEO David Kovarsky told Mining Weekly last week.

What was important in the ferrochrome cycle, Kovarsky said, was for ferrochrome stocks and stainles ssteel production to be in balance, and “we’re seeing very visible signs of ferrochrome production coming into line with stainless steel production”.


“Customers are coming to us for ferrochrome because they’re unable to get it from other sources,” he said, adding that, since the end of March, the London-listed IFM had shipped 28 000 t of ferrochrome from South Africa to China.

“It seems as if we’re nearing the end of the fog,” Kovarsky said of the return of a semblance of market visibility to the subprime-decimated ferrochrome business.


Kovarsky noted that inventories were 
declining and spot prices firming, although not yet to levels sufficiently attractive to justify an unlimied resumption of IFM production at its operation in South Africa’s North West province, where the employee complement, including contractor personnel, had fallen from 920 this time last year to only 250 full-time IFM personnel now.

IFM’s contract with its former mining contracting firm, which deployed 550 people at IFM, was terminated in December, and IFM has itself retrenched 120 of its own permanent personnel.

On signs of slight improvement in the 
ferrochrome market, Kovarsky reported an apparent possible move towards stockpiling in China in anticipation of price increases, as well as an expectation that some ferrochrome capacity might go off line completely in China: “I think there’ll be a contraction of production capacity,” he said.
IFM, which has R374-million cash on hand, in April, resumed ferrochrome production for three months, for the purpose of monetising its raw material inventories in order to contribute to fixed overhead costs.

“We’ll review market conditions at the end of the three-month programme, although ferrochrome prices will have to improve from current low levels for continued production to be economic,” Kovarsky cautioned.

Only 10 000 t/m of material is currently being mined at IFM’s Lesedi openpit outside Rustenburg and Kovarsky refused to be drawn on the price to which ferrochrome would need to rise in order to justify a resumption of sustained IFM production.


“We’ve converted a lot of raw material into inventory, which has generated more cash,” he said.

The independent industry consultancy, CRU, estimates that global ferrochrome inventories have fallen from 23 weeks of consumption in December to 15 weeks of consumption by the end of March.

Kovarsky said that he believed that demand from China would be ongoing: “We’re not alone in experiencing continuing demand from China, which is weighing in more heavily than Europe and North America.”

While exports from China had declined, record sales of Chinese-made vehicles and appliances within China itself was helping the country’s gross domestic product to grow at a rate of 6%: “There’s real growth in end consumption in China, which is pleasing,” Kovarsky said.

He did not see any significant industry consolidation in South Africa: “When you have this kind of market, it’s very difficult to put two companies together that are under pressure, because you then just magnify that pressure.”

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