Mogale Alloys
JOHANNESBURG (miningweekly.com) – Chrome producer Afarak has lifted revenue for the third quarter, ended September 30, by 32.1% to €40.6-million, largely on the back of a 131.9% increase in processed materials sold to 26 347 t.
However, the Finland-based company, formerly known as Ruukki Group Oyj, posted a 28.3% drop in earnings before interest, taxes, depreciation and amortisation (Ebitda) for the period to €21.1-million.
Afarak’s loss for the three months, meanwhile, narrowed from €1.9-million in the third quarter of the 2013 fiscal year to €700 000 in the period under review.
CEO Danko Koncar added that overall ferrochrome production decreased by 21.4% to 20 163 t, while tonnage mined dropped 59.2% to 50 005 t.
“The volumes of ferrochrome processed decreased, as Germany-based processing plant EWW and [South Africa-based] Mogale Alloys had scheduled maintenance during this quarter. The tonnage mined continued to be negatively affected by the temporary suspension of the Mecklenburg mine, in Limpopo, and a lockout at the Turkish mines,” he outlined.
Koncar added that a weak dollar over the quarter had also continued to impact the conversion of revenue and results from operations, as had an increase in the cost of production.
This was largely owing to higher raw material costs in the speciality alloys segment and higher energy cost in the ferroalloys segment as a result of the South African winter energy tariffs.
“The ferrochrome market remains difficult to predict with no signs of recovery in prices during this period. In the longer term, we believe that ferrochrome prices, particularly the speciality and super-alloys segment, have potential to recover to higher levels which we would expect to result in improved margins,” he noted.
The group would, meanwhile, continue to evaluate initiatives with the objective of strengthening its position and providing new growth opportunities.
Looking ahead, Afarak expected its financial performance to improve in the current year, but expected lower Ebitda.
This as demand for commodities were showing recovery, with increases in demand for speciality alloys in the US.
“The ferroalloy market is expected to continue [along] the positive trend [experienced in] 2013 during which consumption reached record levels. To date, however, pricing has not responded to the increased demand,” Koncar said.
The group continued to be prepared for significant price fluctuations and would adapt its production levels accordingly.
At Mogale Alloys, part of the FerroAlloys division, the company expected to start production of medium-carbon ferrochrome in the fourth quarter of the year, which was expected to have a positive impact on profit margins.
“In the speciality alloys division, we are expecting to see an increase in our raw materials cost, owing to current market conditions,” he noted.