Johannesburg - South African ferrochrome producer Merafe
Resources [JSE:MRF] said on Wednesday output from its joint venture with London-listed Xstrata fell
21% in the first quarter, after some furnaces were suspended to cut down on
Merafe said in March that it had struck a deal with
state-owned utility Eskom to shut seven of its furnaces until the end of May
and allow Eskom to buy back the energy the plants would otherwise have consumed.
A total of 130 000 tonnes could be lost in the first and
second quarters as a result of the shutdowns.
South Africa has been struggling to meet demand for power as
new plants meant to plug the shortfall have been delayed. Supply will remain
vulnerable until the first units of Eskom’s new stations become operational
late next year.
The national grid nearly collapsed four years ago, forcing
mines and smelters to shut for days and costing Africa’s top economy billions
of dollars in lost output.
Merafe said producers had achieved a 17% rise in the
European benchmark ferrochrome price to $1.35 per pound for the second quarter,
compared with the previous three months.
“Margins, however, remain under pressure as a result of
continued higher mining inflation, increased standing charges and a relatively
strong rand compared to the US dollar,” the company said in a statement.