London listed International Ferro Metals said that it would aim to move significantly down the South African cost curve and was actively pursuing all methods to do so.
The ferrochrome producer said that the start up of its Sky Chrome mine was the first milestone that would make IFM more cost competitive. Open pit mining operations at the mine started in June and run of mine ore production of about 7,000 tonnes had been stockpiled.
First delivery of ore to the company’s plant was scheduled for the last week of July, at which time sufficient ore stock balances for economic transport would be achieved.
Outgoing CEO Mr David Kovarsky said that the build up of production at Sky Chrome would enhance the miner’s cost base as the mining costs were significantly below those at its Lesedi underground mining.
During IFM’s third quarter, ferrochrome production was down 17% to 42,584 tonnes, owing to planned shutdowns for the upgrade of furnace roofs, which also formed part of the company’s plans to reduce its costs.
The miner noted that the installation of the first furnace roof was nearing completion and that the furnace was expected to achieve full production from mid September, while the second furnace roof should be installed towards the end of August and full production was planned from mid-October.
It was estimated that the roof upgrades would reduce unit fixed costs by 3 cents per pound at full production. Once the furnace roofs had been replaced, the company also planned to run its new off gas cogeneration plant at full capacity. The cogeneration plant and improved electricity consumption were expected to reduce costs by 2.3 cents per pound.
Meanwhile, IFM had signed a supply agreement with Anglo Platinum that entitles the company to 15,000 tonnes per month of concentrate up to November 2020, which would cover almost 30% of IFM’s beneficiated ore requirements. The cost per ton would be significantly below its in house cost of concentrate production.
The commissioning of the UG2 chrome retreatment plant being constructed at Anglo Platinum’s operations would start during September, with the first feed of 15,000 tonnes chrome concentrate expected in January 2012. IFM said that this initiative would reduce costs by an estimated 3 cents per pound.
Further initiatives to reduce IFM’s costs included the increased use of anthracite, expected to reduce costs by 2 cents per pound and the fine tuning of operations from September, after the roof upgrades, which would reduce overheads and maintenance costs.
Mr Kovarsky said that "Good progress on the company’s four main current projects, each of which will have a positive impact on our costs and revenue, means IFM is in a much better position to take advantage of higher expected prices in the fourth quarter."
He added that the implementation of these projects also meant that the company would be in a position to take full advantage of underlying stainless steel demand that should reflect record volumes in 2012.
IFM quoted CRU Analysis’ forecast for record stainless steel production for 2011 and again in 2012, increasing from 31.7 million tonnes in 2010 to 33.5 million tonnes in 2011 and to 36 million tonnes in 2012.
(Sourced from www.wn.com)
