International Ferro Metals (IFM) again experienced unexpected production problems in the fourth quarter of 2012, producing 52,143 mt of charge chrome vs. 57,949 mt in the third quarter and 54,142 mt in the fourth quarter of 2011.

 

IFM said it was running at capacity at the end of 2012 though it plans to take off one furnace under the Eskom buyback program on Feb. 1 for two months.

 

The furnace, however, is already closed; the company had to work on the tap hole and shut the unit on Jan. 18.In addition, the company’s inventory increased to 15,815 mt on sales of 51,092 mt at the fourth quarter of 2012 from 14,795 mt on sales of 54,011 mt at the end of the third quarter and 10,737 mt on sales of 58,389 mt at the end of 2011. IFM wants to keep its inventory at approximately 10,000 mt subject to market and operating conditions.

 

IFM has expanded its marketing into India and boosted its long-term contract sales program from 20% to 35% of production which, inclusive of regular quarterly business, accounts for 70% of the sales book and leaves the balance available for spot sales. Further to this, the increased participation in marketing allowed for cost savings by reducing the use of intermediary agents.

 

Ore sales for the fourth quarter of 2012 were 33,000 mt compared with 46,000 mt for the previous quarter. This was mainly due to the lower Sky Chrome production and to a lesser extent to UG2 supply interruptions over the quarter.

 

Run-of-mine ore production for the fourth quarter decreased to 176,000 mt from 244,000 mt in the prior quarter. IFM’s cogeneration plant, which was to provide about 11% of the smelter’s power requirements, generated 8.9 GWh of electricity in the fourth quarter that represented 4.3% of its total electricity requirement for the quarter. This was lower than the previous quarter, mainly due to lower production caused by electrode failures in the furnaces.

 

The cost of ferrochrome was ZAR6.38 per lb, down from ZAR6.58 in the previous quarter. On an adjusted basis, fourth-quarter production cost was ZAR6.04 compared with ZAR5.95 for fiscal year 2012 and ZAR5.77 in the previous quarter. This represented 27% of the targeted cost reduction.

 

IFM’s net borrowings increased to ZAR436-million at the end of 2012, against net borrowings of ZAR390-million on Sept. 30, 2012. Its debt is expected to expand slightly during the second quarter before decreasing over the rest of the year.