JOHANNESBURG (miningweekly.com) London-listed International Ferro Metals (IFM) has entered into a R150-million agreement with Anglo Platinum subsidiary Rustenburg Platinum Mines (RPM) for the supply of chromite to feed its two furnaces in South Africa for the next decade.

IFM CEO David Kovarsky said that the new source of chromite supply would reduce its input cost and enable it to better leverage the improving ferrochrome market conditions.

IFM would pay about R150-million towards the construction of a chrome retreatment plant to treat the tailings arising from RPM's upper-group two concentrator.

IFM would fund the project using existing cash facilities.

The plant would be owned, maintained and operated by RPM and would primarily be used to extract chromite from the tailings. IFM would be entitled to 15 000 t/m of chromite at no further cost other than transportation costs.

IFM's facilities are about 50 km from the plant.

The contract would run over ten years from the start of the project. However, it is estimated that IFM would only receive concentrate for about nine years, seeing that the company would be entitled to the 15 000 t/m from the commissioning of the plant.

Construction on the plant is expected to start in June 2010, with commissioning expected to follow 12 months later.

"This agreement and the start-up of the cogeneration plant expected in the second half of the year illustrate management's focus on lowering costs and increasing production capacity," said Kovarsky.

The 15 000 t/m represents almost 30% of IFM's current concentrate requirements and the effective cost of the concentrate would be significantly below the company's in-house mining cost.