JOHANNESBURG (miningweekly.com) – London-listed International Ferro Metals (IFM) on Thursday reported that its second-quarter ferrochrome production was up by 85%, compared with the previous corresponding period.

The company produced 57 942 t of ferrochrome from its operations in South Africa in the last three months of 2009.

Ferrochrome sales volumes for the same period increased by 61%, compared with the previous year.

Speaking to journalists on a conference call, IFM CEO David Kovarsky said that the significant increases reflected the suspension of production during November of 2008, when demand plunged. However, both furnaces have been restarted and were now operating at Eskom-constrained capacity.

Kovarsky said that during the second half of 2010, yearly ferrochrome production was likely to increase by a further 25 000 t or 26 000 t as IFM’s co-generation plant was commissioned.

“Eskom is our major constraint at the moment, but as you know, during the second half of this calendar year, our cogeneration plant will be generating 10% of our annual electricity use.”

Since the beginning of the year, stainless steel production had increased, particularly in China, which had a positive impact on ferrochrome demand and spot prices, Kovarsky reported. The trend was similar to those experienced by other commodities and had been driven by Chinese growth and a stabilisation of other economies.

“We expect this trend to continue,” he added.

Strong demand for ferrochrome was particularly evident in the Chinese automobile market, as well as in the home appliances and processing industry.  Demand for ferrochrome was also increasing from the European market.

“The Europeans are much more active in wanting to buy ferrochrome from us,” Kovarsky said.

He stated that IFM was well placed to take advantage of this revival with its strong balance sheet, furnaces running at high use levels, and strong relationship with the Chinese market.

Meanwhile, the capital expenditure budgeted for the remainder of the financial year is R304-million, which includes R187-million for the electricity cogeneration plant and R58-million for mine development.

Kovarsky noted that all major capital expenditure projects were running on time and on budget. “This will further enhance the company’s production capacity and cost base, ensuring that IFL is well positioned to benefit from improving market conditions.”

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