PERTH (miningweekly.com) – Ferrochrome producer International Ferro Metals (IFM) on Tuesday reported that production for the third quarter ended March, was down by 6%, to 54 394 t, compared with the previous quarter.

IFM CEO David Kovarsky told journalists on Tuesday that the lower output was owing to inconsistencies in the grade of bought-in ore feed, while underground mining operations were being ramped up.

Over the last two quarters, IFM has focused on the development of the underground mine, in South Africa, to ensure the long-term sustainability and provision of high-grade ore.

Kovarsky said on Tuesday that, as a result, the output from the mine has declined in the short term.

However, increasing mine production and the creation of larger stockpiles of bought-in ore, which allowed for improved blending and better ore feed consistency, would result in an improvement in production by July this year.

Sales of 64 063 t for the quarter to March increased by 85% compared with the previous quarter sales of 34 553 t. This included 15 735 t sold, but which still bear pricing exposure.

Kovarsky said that the final pricing for these tonnages would be fixed, based on the benchmark price for the quarter in which it was consumed.

It was expected that about 70% would be consumed in the second quarter of 2010, at the higher benchmark price of $1,36/lb and the balance in the subsequent quarter, giving IFM the benefit of both having reduced its inventory and providing pricing upside.

The increased benchmark price reflected the global stainless steel production growth, Kovarsky added, with the European benchmark ferrochrome price increasing by $0,35/lb from $1,01/lb in the first quarter of 2010, to $1,36/lb in the second quarter.

Looking ahead, Kovarsky said that IFM expected the price trend to continue, as demand from the US and Europe continues to improve.

Meanwhile, Kovarsky noted that the construction of the chrome retreatment plant at South Africa’s Rustenburg Platinum Mines, was expected to start in June this year, with commissioning expected in July of 2011.

During February this year, IFM concluded an upper group two ore supply agreement with Rustenburg Platinum Mines, a subsidiary of Anglo Platinum, under which IFM would pay R150-million for a chrome retreatment plant to extract chrome concentrate from Rustenburg Platinum Mine tailings.

The contract has a ten-year life, starting on the construction date, and entitles IFM to 15 000 t/m of concentrate.

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