JOHANNESBURG (miningweekly.com) – After a difficult trading 2016 financial year, LSE-listed Afarak says it is well-positioned to benefit from an upswing in the market that started in the three months ended December 31.
The group on Friday posted earnings before interest, taxes, depreciation and amortisation of €5.5-million for the 2016 financial year, compared with €17.2-million in 2015. revenue also decreased to €153.6-million, compared with €187.7-million the year before.
Ferrochrome production fell by 7.6% year-on-year to 95 739 t, compared with the 103 591 t produced the year before.
"Throughout 2016, Afarak faced largely depressed market conditions, affecting most chrome and ferrochrome producers,” CEO Guy Konsbruck said.
He added that, with prices gravitating downwards, the company’s sales volumes were hit hard, particularly in the specialty segment.
“Our mining and production volumes were also lower owing to the closure of Mecklenburg, safety stoppages at the mines and the temporary closure of Mogale Alloys.”
In the second half of 2016, Afarak confirmed its agility and responsiveness to expected market conditions.
With a recovery in market prices and a strengthening in demand, Afarak was able to respond in a timely and effective manner.
As benchmark prices reached an eight-year high in December, Afarak brought on stream three projects that enabled it to benefit from the upswing.
The Mogale plant is now operating as a swing plant and one of its silicomanganese furnaces was switched to ferrochrome, enabling better margins in the current market.
Opencast mining has restarted at Mecklenburg and the shaking table project at the Ilitha mine is now in full production.
These factors have allowed Afarak to register a strong performance in the fourth quarter and confirmed the company's entrepreneurial nature in identifying and reaping opportunities.
Chrome ore and ferrochrome prices are expected to remain strong in the first quarter of 2017, positively affecting Afarak's financial performance. The company expects to achieve significantly better results in the first quarter of 2017 than in the first quarter of 2016.