The first-quarter ferrochrome production of the Xstrata-Merafe chrome venture was 76% lower than for the corres- ponding period in 2008, the JSE-listed Merafe Resources said last week.

Merafe’s attributable production for the quarter was 19 000 t of ferrochrome, compared with 79 000 t for the corresponding period the year before.

The indicative published price for the output was US79c/lb, compared with US121c/lb for the corresponding period in 2008.

Merafe, headed by CEO Steve Phiri, said that 17 of the chrome venture’s 20 furnaces, equivalent to some 80% of annual pro- duction capacity, were suspended during the first quarter as destocking continued in response to weak demand.

The European benchmark price has since fallen US10c/lb below the Q1 price of US79c/lb.

Reuters reports that the global ferro- chrome industry has slashed output by around two-thirds in recent months in response to slumping demand.

Reuters adds that most producers in South Africa – the world’s biggest producer of ferrochrome, used in stainless steel to prevent corrosion – have cut production back sharply.

“We don’t see the price falling below the current US69c/lb,” Phiri reiterated to Mining Weekly.

Despite the 80% production cutback, the company was continuing to hold on to retain its full complement of 6 000 permanent employees.

“We are biting hard, but still holding,” Phiri told Mining Weekly.

He sees improvement in sight towards the end of the third quarter and the beginning of the fourth quarter of 2009.

Merafe generated R540-million in cash in the 2008 year, but visibility remains short.

“We’re working day to day. We are seeing some signs of recovery in the East, [though] small, and we hope they are long lasting,” he said.

“We have a variety of different products and we are running out of some of them, and then we replenish those stocks. But it’s more about replenishing than going full blast.”

The three smelters out of the company’s 20 smelters that were continuing to produce were the three lowest-cost smelters, in the Lydenburg and Steelpoort areas, which made use of the advanced Premus technology.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.