Mining group Xstrata and joint venture partner Merafe Resources have suspended more ferrochrome production due to weak market conditions, with total shut furnaces now accounting for half of annual capacity, the firms said on Monday.
Merafe shares slid 13,2% by 7.25am GMT.
”The venture reviews market conditions closely on an ongoing basis and has decided to implement further reductions in ferrochrome production to respond to short-term weakness in demand,” a statement said.
Ferrochrome is a key component in stainless steel, making it withstand corrosion, but the global economic downturn has forced steel firms to slash output.
Xstrata and Merafe have shut a further five furnaces representing 406 000 tonnes of capacity after announcing on November 10 the joint venture was suspending 500 000 tonnes of capacity.
”The total suspended capacity represents 906 000 tonnes or 52% of annual operating capacity,” it said.
Total 2008 ferrochrome production will be reduced by a further 50 000 tonnes, on top of the 80 000 tonnes as a result of the November 10 closures.
No permanent employees will lose their jobs to enable the operations to resume production as soon as market conditions improve, the statement said.
South Africa is the world’s biggest producer of ferrochrome. – Reuters