Ruukki to quadruple SA capacity

Allan Seccombe | Thu, 05 Nov 2009 14:45
[miningmx.com] -- RUUKKI Group is completing a study into growing ferrochrome smelting capacity in South Africa to around 400,000 tonnes annually over the next four years, growing a division that is now headed by Danko Konchar.

Konchar, a Croatian-born entrepreneur, owns a third of Finland's Ruukki through the Kermas Ltd, which has exited another ferrochrome group called Samancor. Koncar is joining Ruukki full time as the CEO of its Minerals Business unit.

"We are very pleased Danko is joining us. We have big ambitions for Ruukki and we want to build a substantial company that will be an industry leader," Alwyn Smit, Ruukki's group CEO, told Miningmx.

"You can't do that unless you have the best management available and Danko is perhaps the best known operator in the ferroalloy space," he said. "He's turned around ferroalloy plants in Russia, he's turned around Samancor. He's sold his stake in Samancor, resigned as chairman there and joined Ruukki full time."

Smit has told Miningmx Ruukki plans to hive off its timber business for a separate listing. Quite where this leaves Smit is not clear. He said he plans to stick to the minerals business, but he wouldn't be drawn on what his position in that business will be.

The bulk of Ruukki's ferrochrome production comes from its Mogale plant in South Afrrica, which buys material to treat. It is running at full annual capacity of 110,000 tonnes per annum but that will be tweaked upwards to 120,000 tonnes.

Ruukki is finishing a feasibility study into the construction of two 60 MVA furnaces. The first can be funded out of existing cash resources and cash flow and the second might entail the raising of some debt, Smit said.

Ruukki is keen to acquire a mine to have a mines-to-market strategy, like it has with its European minerals business, including production in Turkey, a niche, high-end products smelter in Germany and a marketing arm in Malta.

"Danko's vision on ferroalloys, which we subscribe to, is a fully vertically integrated business model that produces an end product that can be marketed to a wide range of clients," Smit said.

A proposed acquisition by Ruukki of a junior platinum and ferrochrome group, Sylvania Resources, has fallen through but the two parties said they are still looking at ways to joint venture in certain areas.

Sylvania has subsequently announced it is forming a joint venture that will combine Sylvania's ability to retreat surface tailing stockpiles for recovery of PGMs into concentrate with Jubilee's industry ConRoast smelting facilities.

Smit conceded the transaction potentially left Ruukki "out in the cold" but it still had an open door to Sylvania and Jubilee to use its furnaces.