Glencore ferrochrome output plunges 95% in Q1

Glencore holds a 79.5% stake in the Glencore-Merafe Chrome, with the balance owned by South African chrome miner and smelter, Merafe Resources.

The sharp decline was attributable to the continued idling of the venture's Boshoek and Wonderkop smelters in Rustenburg in South Africa's North West Province where operations were suspended in May and June last year, respectively, in response to global market pressures and rising electricity costs.

South African power prices have risen by more than 900% since 2008, a factor that has forced most major smelters to shut down since the April-June quarter last year, as reported.

Despite a phased restart of the operations in February at Glencore-Merafe Chrome's Lion Smelter in Steelpoort, Limpopo Province, overall smelting capacity remains largely idle.

Ferrochrome production attributable to Merafe Resources from the joint venture was 3,000 tonnes in Q1, meaning that collectively, Glencore-Merafe Chrome produced 16,000 tonnes of FeCr in the January-March quarter, lower by 33.2% from a year earlier.

In contrast, Glencore's share of chrome ore production from the same venture edged up 3% year-on-year to 830,000 tonnes in Q1, while output attributable to Merafe stood at 214,000 tonnes, also up 3% year-on-year, the production report notes.

Glencore and Merafe formed the venture in July 2004 by pooling their chrome operations to create a leading global ferrochrome producer. The joint venture operates five ferrochrome smelters and 22 ferrochrome furnaces in South Africa, with an annual capacity of 2.3 million tonnes. Merafe Resources, headquartered in Bryanston, South Africa, was incorporated in 1987.

Written by Tiffany Hou, houtianhui@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com