Chrome division
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Due to the financial crisis and the devastating effect it has had on stainless steel production and consequently ferrochrome demand, Machadodorp took Furnaces 3 and 5 out of production on 25 October and Furnace 2 on 8th December 2008. No date has been set for restarting this idled capacity but the market will be closely monitored.
The Dwarsrivier Mine has also been affected and after sufficient stockpiles have been built up production will be reduced in early 2009. The new chrome from tailings plant will be operational from early 2009. An additional, new underground portal is currently under development in the North of the property.
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Iron ore division
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Iron ore sales for the year (Jul 2008 to Jun 2009) were 12.6% higher and totalled 7.4 million tons (2008: 6.6 million tons). Export sales increased 18.5% while local sales decreased compared to last year.
For the six months between Jan to Jun 2009, more than 3.9 Mt iron ore was exported, a 30% increase over the same period of 2008. The increased export volumes can be attributed to the following key factors: 1) higher production at the new Khumani mine, 2) improved efficiencies on the rail line from the mine to the port, 3) increased loading rate at the port of Saldanha Bay and 4) higher sales into China.
The iron ore export demand outlook for the next financial year remains positive as GDP growth of developing countries have a great impact on demand for iron ore as it is a significant input in steel for infrastructure development. China and other developing economies are expected to continue to drive long term iron ore demand growth. Future seaborne iron ore trade would continue to grow after contracting the past year as a result of the negative economic climate.
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Manganese division
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After record sales in FY 2007/08, the Nchwaning Mine is taking the opportunity of reduced sales due to the financial crisis and the cutback in steel production to replenish stockpiles. The market situation is being constantly monitored and production will be adjusted to meet demand.
Projects are going ahead to increase capacity at Nchwaning 2 and 3 from 3.6 to 4.2 Mill tpa by 2011 and at Gloria from 0.48 to 0.96 Mill tpa by the second half 2009.
At Cato Ridge, No 6 furnace was finally recommissioned in late October after the accident in February and the Works is again operating at full capacity. Stock levels, which were reduced during 2008, are being increased after which a decision will be made whether production needs to be reduced due to the difficult market circumstances.
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