Dale said that the Sallies board had informed staff, employees and the National Union of Mineworkers of its intention to mothball the Buffalo plant and to cease operations there, owing to Buffalo’s inability to secure economical prices for its high- phosphorus fluorspar.

While the specification for Witkop fluor- spar was 400 parts per million (ppm) phosphorus pentoxide, Dale said that the specification for Buffalo was three times higher, at 1 200 ppm equivalent.

Current global uncertainty had made Buffalo’s “very restricted” market “very vulnerable”.

While fluorspar prices had risen to $400/t, the Buffalo product was still selling in the $150/t range.

“The last contracts we had at Buffalo were at $155/t and the guys are sophisticated negotiators and it’s a restricted market and the whole history of Sallies is that our shareholders have been subsidising our customers, and our customers have got used to that and they think that our shareholders are going to continue to do that, and we are not.

“The reason we’re going to Canada is that everybody in the fluorspar industry goes there to talk prices for calendar 2009,” he said en route to Montreal.

Buffalo had produced the high-phosphorus acid-grade fluorspar from tailings discarded from the original mining operations between 1974 and 1994.

In contrast, the Witkop mine was in turnaround mode both operationally and financially, and “we don’t want anything to detract from that”.

“We are busy focusing on things that will turn the company around and we have not only got a very dynamic management group, but we’ve got a very dynamic group of shareholders, so everybody is putting their shoulders to the wheel to see how we can add value,” Dale said.

Consultation with 130 Buffalo employees would focus on options to limit the adverse effects that plant closure would have on the work force.

A few Buffalo workers were likely to be transferred to Witkop and redundancy was on the cards.

Closure had been a “very difficult” decision: “We looked at expanding volumes to reduce unit costs and various technical approaches to reducing phosphorus. None of these are viable. The limited power supply to Buffalo further reduced our options,” Dale said.

Sallies would complete a South African Mineral Resource Committee-compliant assessment of the ore remaining at Buffalo and would direct its management resources towards enterprises that could add value.

Witkop’s fluorspar was consistently in excess of 97% fluorspar, which was the definition of acid-grade fluorspar, and the contaminant levels were low.

“It’s got a high appeal for the producers of hydrofluoric acid (HF),” Dale added.

The global market for acid-grade fluorspar totalled 4,5-million tons, with one-half traded and one-half contracted.

Sixty per cent of the HF made from acid-grade fluorspar was used to make flurochemicals for refrigerant gases and fluroplastics, and 30% to make aluminium trifluoride, which reduced power consumption in aluminium smelters.

“You cannot make aluminium cost-effectively without it,” Dale said, adding that the rest of the HF went into niche markets like the growing uranium-enrichment market.

There was no news yet on Sallies obtaining permits to mine metallurgical-grade fluorspar in Zambia and the company would also like to start exploring for fluorspar in Mozambique.

Everything was on track for the Honeywell hearing, Honeywell’s $6,8-million claim against Sallies having been reduced to $4,5-million, which meant that it was “no longer a com- pany killer”. Sallies had submitted a $3,8-million counterclaim to the final hearing, which was still scheduled to take place in Switzerland on October 27

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