Mining company Merafe Resources says it has set its sights on the ferrochrome market as the company’s major source of income for the immediate future.

However, this does not mean that the company has dis-regarded its coal interests, CEO Steve Phiri avers.

He reports that the com-pany’s coal-mining projects are buoyant and that it is awaiting the awarding of new-order mining rights for the Schoongezight and Brak-fontein collieries, which the company is developing with joint-venture partner Sentula Mining.

“The Schoongezight and Brakfontein projects have total target coal resources of about 10-million tons. 
“Both projects are open-cast operations and are strategi-cally positioned to supply export-quality and Eskom-quality coal,” says Phiri.

Although the company’s 2008 revenue was up by 68%, Phiri reports that 2008 was a “year of two halves”.

He says that 2008 started off well with significant worldwide demand for stainless steel, of which ferrochrome is an important component, while the second half of the year was characterised by a significant fall in demand for the alloy, particularly in the fourth quarter.

As a result of the slowdown, Merafe had to shut these down 17 of its 20 furnaces and these will remain off-line as long as demand is low. However, Phiri says that the company is still better off than its competitors, where 100% shutdowns have been reported.

Phiri says that the company expected demand to slow down in the second and third quarters of 2008, with an improvement in the fourth quarter.

However, this was not the case. “There was a decreased demand for ferrochrome as stainless steel production slowed during the quarter. This led to stockpiling of chrome ore at South African and Chinese ports. As a result, some marginal producers panicked and sold off surplus ore at any price, which flooded the market,” says Phiri.

Although he says that there are indications of an increase in stainless steel demand, it is too soon to assess the extent of the demand and the impact that it will have on the company.

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