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IFM Section 54 notice lifted, 4 000 t of production lost

26th November 2014

By: Leandi Kolver

Creamer Media Deputy Editor

  

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JOHANNESBURG (miningweekly.com) – International Ferro Metals (IFM) on Wednesday announced that the Section 54 notice for its two ferrochrome furnaces and pelletiser has successfully been lifted following a meeting with the Department of Mineral Resources.

The Section 54 notice had been issued last week following a health and safety incident that led to two employees being exposed to carbon monoxide (CO) gas, resulting in the temporary suspension of operations at the company’s furnaces and pelletiser.

IFM said that, as previously announced, the company’s furnaces were continuing to ramp up, with furnace 1 expected to reach normal production by November 27 and furnace 2 expected to achieve similar levels of production by the end of November.

“We are pleased that the Section 54 notice has been lifted and that the furnaces are well on their way to full production, but disappointed that the impact to the business in a time of weak ferrochrome prices will result in an increased operational loss for the current half of the year,” IFM CEO Chris Jordaan commented.

IFM said an initial assessment of the impact of the Section 54 stoppage on ferrochrome production indicated a loss of about 4 000 t.

As a result, IFM’s production guidance for the first half of 2015 was in the range of 97 000 t to 100 000 t while production of 215 000 t to 222 000 t of ferrochrome was expected for the full year.

The company added that its November production costs would also be negatively impacted by the Section 54 stoppage and was estimated at about R8.50/lb, with the overall production costs for the first half of the 2015 financial year expected to be about R8.15/lb.

IFM said that ore cost remained a major focus area, with higher upper-group 2 (UG2) use and ore supply from the Rooderand mine, in the North West, expected to reduce ore input costs going forward.

“Rooderand mine is expected to provide the company with 20 000 t run-of-mine LG6 ore as from January 2015,” IFM said.

Further, the Lesedi mine, 100 km from Johannesburg, with its accelerated ramp-up should provide the much-needed MG1 and MG2 reef ore.

“This is expected to improve self-sufficiency of ore supply by June 2015. Both these operations are expected to produce at a cost below that of buy-in ore,” IFM said.

Jordaan added that the events that had pushed the company into a higher loss during the first half of the year than it had originally expected – namely lower volumes, a one-off cost for reductant trials, and a higher fines-to-lump ratio resulting in higher discounts – were not expected to be repeated during the second half of the year. 

“Moreover, with the introduction of LG6 ore in the third quarter and MG1/MG2 ore in the fourth quarter, which will result in lower ore costs, we expect to see a significant improvement [in] profitability during these periods,” he said.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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