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Winter electricity tariffs, low prices prompt Samancor to switch out furnaces

JOHANNESBURG – Chrome producer Samancor Chrome intends to switch out furnaces at its eMalahleni, Middelburg, Steelpoort and Mooinooi operations, owing to the higher winter tariffs charged by Eskom, paired with a “sudden” downturn in the chrome market.

The recent downturn saw chrome ore prices dropping from $350/t to below $150/t, while ferrochrome prices in China dropped from $1.15/lb to $0.65/lb.

The company said at the weekend that this would further constrain its cash position, as it was already facing financial challenges.

“Variable costs, such as the high cost of electricity and reductant prices, greatly contribute to making it unfeasible to run some of the furnaces, which are currently producing at a cost higher than the selling price,” Samancor noted.

It added that it was in the process of evaluating which furnaces would temporarily be switched off, noting that its cash position would most probably not improve during the winter months owing to the high cost of electricity.

Source : Mining Weekly