Xstrata-Merafe to sell Horizon mine

Time of article published Apr 29, 2013

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Dineo Faku

THE Xstrata-Merafe chrome venture, the biggest producer of ferrochrome globally, is talking to parties interested in buying its high-cost Horizon mine in Limpopo.

A sale, which is expected to be completed by the end of the year, aims to keep the joint venture’s costs as low as possible.

It would not affect the supply of chrome as there were enough reserves even after the sale of the mine, Merafe spokeswoman Kajal Bissessor said on Friday.

“The decision has been made. We are currently going through the process of engaging with interested parties,” she said.

Bissessor said Horizon was one of the more expensive mines. The company allocated R66 million to increase the capacity of Horizon to 40 000 tons a month by June.

Merafe’s wholly owned Merafe Ferrochrome & Mining has a 20.5 percent interest in the Xstrata-Merafe chrome venture. Xstrata owns the remaining 79.5 percent.

On Friday Merafe said its attributable output for the quarter to March increased 3 percent to 67 000 tons compared with the same period last year on the back of improved furnace efficiencies.

“Rustenburg furnaces exceeded expectations in terms of production volumes and efficiencies as a result of the successful commissioning and ramp-up of the Tswelopele pelletising plant,” the company said.

During the quarter the venture extended an Eskom buy-back programme that will continue until the end of next month. A total of 100 000 tons of production was sacrificed in the first quarter as Eskom paid the venture to reduce electricity consumption.

“Although more production was surrendered in the first quarter of 2013, as a result of the Eskom buy-back arrangements, compared to the 2012 comparative period, production volumes increased as a result of improved overall performances of the venture furnaces,” the company said.

According to the company, the buy-back programme did not have an impact on jobs.

In addition to the production increase, Xstrata-Merafe will benefit from a 13 percent boost in the European benchmark ferrochrome price during the second quarter compared with the price in the first quarter.

The Xstrata-Merafe venture produced 1.18 million tons of ferrochrome last year, which was 8 percent less than its production in 2011, as it used only 66 percent of its operating capacity.

To avoid incurring high winter electricity tariffs, the venture also took the decision to produce at only 40 percent of its total capacity last winter.

Merafe’s shares rose 2.82 percent to close at 73c on the JSE on Friday, while the JSE’s general mining index fell 1.08 percent.

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