Xstrata and its chrome partner Merafe Resources said on Monday they would suspend six ferrochrome furnaces in South Africa due to weak demand, cutting output by 80 000 tonnes this year.
”As the global market leader in ferrochrome, Xstrata and Merafe are acting responsibly and decisively to cut back production during a period of short-term demand weakness,” Peet Nienaber, Xstrata Alloys chief executive, said in a statement.
Xstrata said it hoped to scale back production in a bid to optimise unit costs, and would redeploy staff within the group.
South Africa is a leading producer of ferrochrome, a corrosion-resistant alloy of chrome and iron and is mostly used in the production of stainless steel.
Xstrata and Merafe said the six suspended furnaces represent about 29% of the Xstrata-Merafe Chrome Venture’s total available capacity. The three furnaces at Rustenburg, two at Lydenburg and one at Wonderkop will remain suspended until further notice, the company said.
Last month, African Rainbow Minerals (ARM) said uncertainties in the global economy had led to a slowdown in demand for ferrochrome and chrome ore, forcing it to shut two ferrochrome furnaces. It declined to say how much output would be curtailed by the suspension.
Global demand prospects have turned gloomy as concerns of a world-wide recession have led to a curb on infrastructure spending as well as a fall in demand from China, one of the largest importers of metals. – Reuters