[miningmx.com] — FERROCHROME producer International Ferro Metals (IFM) is ticking all the boxes in its attempt to turn the corner on a difficult past, meeting key milestones as its seeks to lower costs and increase capacity.
Posting an interim management statement and quarterly production report on Tuesday, the company said a major pillar of its cost reduction plan – a roof upgrade for its two furnaces – was done on time and within budget.
The second of the two furnaces was commissioned on September 2, and the company said it has already benefitted from efficiency improvements, especially on power consumption.
IFM has set itself a target to slash 10.9c/lb off the ferrochrome production cost price it reported the previous year – 89.4c/lb – by March, having already achieved a 1.7c/lb reduction during the September-quarter despite operating at reduced capacity and paying Eskom’s winter power tariffs.
The company is banking on higher production volumes, lower electricity costs from a co-generation plant as well as a cheaper supply of UG2 to account for the balance of the earmarked cost savings.
“The successful ramp up of IFM’s two furnaces on time and on budget is a genuine operational achievement and a key part of our cost-cutting programme,’ newly appointed CEO Chris Jordaan said in accompanying notes.
“The company should be cash generative from October 2011 and we expect this position to continue to improve as the furnaces are optimised and when the UG2 plant is commissioned in January.’
IFM would be entitled to 15,000 tonnes of chrome concentrate per month from a newly commissioned Anglo American Platinum plant until 2020, starting in January. This accounts for 30% of IFM’s requirements, and would reduce costs further by an estimated 3c/lb from that date.
As for the co-generation plant, nine of its 10 engines are already operating at levels of around 65% of capacity. All the engines are expected to be running at full capacity by end-December, enabling cost savings of another 2.3c/lb.
MINING
Mining production for the quarter from the Lesedi mines totalled 191,000t run-of-mine, in line the previous quarter’s 198,000t. Open pit operation had begun at Sky Chrome and the mine produced 72,000t of run-of-mine for the quarter.
This is expected to ramp up to 50,000tpm by the end of March. Full production of 100,000tpm is expected in 2013.
Ferrochrome production of 31,637t for the quarter was down 26% due to the scheduled shutdowns for the roof upgrade, but in line with earlier guidance.
“We are focussed on earning the right to grow,’ Jordaan told Miningmx when asked about its major objectives for the rest of the year, saying the group is well placed to achieve that with its plans to cut costs and improve operational efficiencies.
