Brendan Ryan |
Tue, 20 Oct 2009 12:25
[miningmx.com] -- XSTRATA and its partner Merafe Resources are gradually ramping up ferrochrome production levels at their South African smelters, but profit margins remain under pressure because of the strong rand.
Xstrata reported in its interim management statement and third-quarter production report on Tuesday that ferrochrome production had been progressively increased to 60% of total capacity by early July and had reached 85% by the end of September.
But the group pointed out the rand had continued to strengthen against the dollar during the third quarter, and was currently trading near to a 14-month high.
Xstrata said: “The strong rand has resulted in margins remaining under pressure, and subsequently ferrochrome producers have achieved a 16% increase in pricing.
“The European benchmark ferrochrome price was settled at $1.03/pound for the fourth
quarter, up from $8.89 in the previous quarter. “
The group reported that production from integrated vanadium operation Rhovan was suspended during the third quarter “for extended maintenance”, but Rhovan returned to full production on October 17.
Xstrata also reported that its Mototolo platinum joint venture had reached its full steady state output level of 209,500 ounces of platinum group metals (PGM) annually.
Development of the underground mining operation at Eland Platinum near Brits had begun. This would replace the present opencast production and progressively increase production to 300,000oz of platinum annually from 2014.
A breakdown of Xstrata’s coal numbers shows that total production is up at 69.4 million tonnes (mt) for the nine months to end-September (compared to 63.1mt in the previous comparable nine months). However, the contribution from the South African mines has dropped.
South African thermal coal production for
the nine months dropped to 15.4mt (17.1mt) because of the planned shutdown of the Impunzi Underground operation and reduced demand for unwashed coal in the domestic market.
According to Liberum Capital, the third-quarter performance reported by Xstrata was “solid”.
A Liberum research report said: “Expect news flow from Xstrata in the coming months to come from organic growth announcements on new project go-aheads and a ‘go it alone’ strategy of bolt-on mergers and acquisitions.”