[miningmx.com] – ESKOM’s warning in January – that it might impose a
fresh round of load-shedding owing to an unsustainable maintenance backlog – has
come to pass with Merafe Resources being the latest ferrochrome producer asked to
idle furnaces in the past week.
Stuart Elliot, CEO of Merafe Resources, declined to add to a JSE announcement this
morning in which the company styled discussions with Eskom as attempts to “assist
Eskom with its immediate power requirements’. However, customers would be
supplied from inventories, he said.
Xstrata has already agreed to shut two furnaces, and could shut two more, although
it also hastened to add that supply to customers would not be interrupted.
According to a report by Reuters, Xstrata would lift production from other, more
energy efficient, furnaces.
However, Numis Securities, a UK stockbroker, believed that were four furnaces to be
shut at Xstrata, some 430,000 tonnes of material would be removed from the market
which would be supportive for the spot price.
Ruukki CEO, Alistair Ruiters, was unavailable at the time of writing, but it’s thought
his company’s furnaces are also at risk of shutdowns.
Eskom said last week that its current planned outage exceeded capacity it had set
aside for maintenance, a situation CEO Brian Dames said was “unsustainable’. It has
said in the past that industry should cut power consumption 10%.
Discussions between Eskom and ferrochrome producers are around compensation for
lost production with Eskom likely to agree to a combination of payment for power –
usually at a rate just above the fixed cost of production – and the application of
summer tariffs during the winter months.
Normally, ferrochrome producers put furnaces in a programme of maintenance over
the high-cost winter period. As they now are likely to operate over winter, to
maintain production levels, compensation will be required.
At the time of writing, Eskom had not responded to telephonic messages regarding
the nature of its discussions with mining firms, or whether requests for shutdowns
would be extended.
