JOHANNESBURG (miningweekly.com) South Africa-focused International Ferro Metals (IFM) said on Tuesday that the ferrochrome market had "greatly improved" over the last three months, reflecting increased demand, not only from China, but also from the US and Europe.

IFM CEO David Kovarsky said in a conference call that the improving global ferrochrome demand, and the anticipated increased power supply from South African State-owned utility Eskom's Medupi power station in 2012, had encouraged IFM to begin a prefeasibility study (PFS) to significantly expand operations.

The PFS would be completed by January 2011.

Kovarsky said that the company planned to increase its production capacity from the current 267 000 t/y to 665 000 t/y over the next four to five years.

"We cannot underestimate the task of more than doubling up our production, but IFM believes that it is achievable given the increase in world demand, and the tight production capacity in South Africa, owing to the current Eskom constraint."

IFM would supply the additional chrome ore from its own mines. Kovarsky noted that the company's planned Skychrome mine would be developed by then.

Meanwhile, IFM reported a 35% increase in sales volumes to 71 000 t in the second half of the financial year ended December 31, compared with the first six months.

"Our results in the second half of the year has markedly improved from the first half, when both our furnaces were shut down, but still below 2008 results which saw record ferrochrome prices," commented Kovarsky.

The company reported a 14% year-on-year decline in second-half revenue to R452-million, but this was a 77% improvement on the June 2009 results.

The ferrochrome producer posted a before-tax loss of R145-million in the December 2009 half-year, which was a bigger loss than the R27-million reported in the December 2008 period, but an improvement on the R429-million loss in the first six months of the financial year.

"The company expects short-term ferrochrome demand to remain positive, with possible volatility along the way. However, in the long term, we are confident that demand for South African ferrochrome demand will remain strong, as developing economies continue to urbanise and industrialise and as they look for diversity of supply," Kovarsky stated.