IFM shuts furnace in new Eskom buy-back deal
Integrated ferrochrome producer International Ferro Metals (IFM) last week said it would temporarily shut down one of its two furnaces as it entered a new electricity buy-back agreement with State-owned power utility Eskom.
IFM, which shut down one of its furnaces on January 18 owing to maintenance requirements, would keep the furnace shut until March 31.
The London-listed group switched off two furnaces last year as it participated in the industrywide Eskom electricity buy-back programme to assist with the power utility’s supply requirements.
Eskom would buy back the unused portion of the electricity at a “financially beneficial” rate to IFM, said CEO Chris Jordaan.
He noted in a statement that the deal would not impact on other mining and ore beneficiation operations or the company’s contractual commitments, as the second furnace would continue operating at full production.
Eskom spent R1.8-billion between mid-December 2011 and the end of May last year on buying back power from industrial customers and securing over 1 000 MW of capacity allocated to participating large customers.
Earlier this month, Engineering News reported that, in an effort to ensure a “cushion” for its summer maintenance plans, Eskom had entered into 11 power buy-back deals with ferrochrome and alloy producers for the period December 1, 2012, to March 31, 2013.
Ferrochrome producers Hernic and Xstrata-Merafe agreed in December to participate in Eskom’s second buy-back round.
Eskom’s budget allocation for all demand response and buy-back programmes was reported to be about R2.5-billion for 2012/13.
Meanwhile, IFM reported a year-on-year and quarter-on-quarter decline in both ferrochrome production and sales during the three months to December 2012.
Just over 52 100 t of ferro-chrome was produced in the period under review, compared with the 57 949 t produced in the prior quarter and the 54 142 t in the corresponding period the year before.
The ferrochrome producer announced in November that the two furnaces had been experiencing productivity issues owing to recurring electrode breaks.
However, the challenges were resolved and production for the period was higher than expected.
At the end of the quarter, IFM reported it was operating at full capacity, with Furnace 2 producing near-record production in December.
“. . . both furnaces have fully recovered from the electrode paste issue and actions taken will prevent the issue from recurring. We successfully limited the impact on production, which exceeded our previous guidance and, therefore, the impact on sales was [also] contained,” said Jordaan.
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