Merafe sees strong growth in stainless steel

[miningmx.com] — MERAFE RESOURCES LIMITED said on Tuesday its medium to long-term growth forecast for stainless steel remained strong, with production expected to reach record levels this year.

Merafe, South Africa’s largest producer of ferrochrome – a key component in stainless steel, said in a presentation posted on its website it expected a recovery in the metal to stretch through to 2013 due to continued global economic growth.

The company, however, flagged a shortage of quality ore reserves and rising production costs as some of the barriers that could tighten supply.

Merafe, which operates a joint venture with Xstrata, also said no new ferrochrome capacity will come on stream in South Africa in the near future.

The company said last month its ferrochrome production in the nine months to September fell 7 percent, due to reduced operating capacity.

Merafe also has a right to participate in the construction of Xstrata’s new smelter, which will have a capacity of 360,000 tonnes per year, boosting the group’s overall ferrochrome capacity to over 2.3 million tonnes. [ID:nLDE69J086]

Merafe said in the presentation it expects funds for the project to be sourced from future internal cash flows, with the remainder from loans.