Ivan Glasenberg
The ferrochrome business remains solid and there is still a large amount of ferrochrome required in the world.
Unfortunately, most of the production occurs in ferrochrome plants in China, while South Africa continues exporting chrome ore and moving a large amount of it to China, owing to South Africa not being competitive in respect of electricity prices.
Glencore CEO Ivan Glasenberg pointed this out in response to a question put to him by Engineering News & Mining Weekly during a media conference following this month’s presentation of half-year results in which the marketing division of the London- and Johannesburg-listed company outperformed with adjusted earnings before interest and tax of $2-billion, allowing the company to raise full-year guidance to the top end of its long-term range of $2.2-billion to $3.2-billion.
At the same media conference, Glencore ferroalloys head Japie Fullard said electricity pricing in South Africa had escalated by more than 500% over the last ten years.
“As the increases push through, we’re going to struggle even further and I can’t see that we’ll be able to operate our ferrochrome smelters in that high pricing environment.
“We’re investigating cogeneration, alternative electricity sources and green energy. We’ve also invested a lot in pelletisation to increase our own efficiencies, but beyond that there’s not a huge amount that we can do.
“We’re also in discussions with Eskom, Nersa (the National Energy Regulator of South Africa) and with the Department of Mineral Resources and Energy. Eskom’s looking at the short-term framework in which they would give relief to the energy-intensive users.
“On top of that, Eskom is also looking at the long-term framework. If one of those comes through, we’ll put it into our figures and then re-evaluate. But, with the higher electricity prices, we’re definitely under pressure.
“We’re also looking at streamlining our business. We went into the Section 189 processes at most of our ferrochrome operations. We are repositioning ourselves to be still in this business and to pull back into a position where we can be robust,” said Fullard.
Engineering News & Mining Weekly reported in June that the alloys division of Glencore Operations South Africa and Merafe had commenced a consultation process in terms of sections 189 and 189A of the Labour Relations Act relating to potential downsizing.