By Bianca Markram
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Going non-ferro: Afarak is looking to
expand its offering of speciality chromite products in
the wake of softer pricing and demand for ferroalloys
(source: Afarak).
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Finland-based Afarak Group Plc., which produces chromite and
ferrochrome in South Africa, is looking to navigate a tricky
ferro-alloys market by producing more specialised products for
the foundry and refractories sectors.
The company first embarked on the strategy eight years ago,
when it began producing 400-500 tpm foundry sand, chemical and
refractory-grade chromite, depending on availability, for sale
on a spot basis, according to Michael Ilja, executive director
at Afarak.
"We have the niche grades in the ground," he told
IM at the Mining Indaba Conference in Cape
Town, South Africa.
Ilja noted that Afarak has a significant, although not
large, share of the foundry-grade chromite market, including at
least 90% of the Finnish market and sizable supply deals in
Russia, Ukraine, India and Korea.
Afarak expects market fundamentals for foundry and
refractory chromite to strengthen this year, with some chromite
producers shrinking operations or winding up.
"We think the market will become tighter," Ilja said.
Afarak owns three mines in South Africa in the
country’s Bushveld comlex, which has 70% of the
world’s chrome resources.
The company does not currently mine all of the niche grade
chromite that it sells, according to Danko Koncar, business
development director.
"We sell more [refractory, foundry and chemical-grade
chromite] than we produce, simply because
we are positioning ourselves to service our
clients’ needs," he explained. "We have the
possibility to ramp up production [of these products] in our
mines if the need arises, but we would rather utilise the
material that is available, than create more supply and
downward price pressure. Instead, we’re trying to
be responsible about how we conduct ourselves in this niche
market," he told IM.
Kenmare expects greater stability in
2016
Improvements to the power network in northern parts of
Mozambique, as well as additional megawatts (MW) added to the
grid, will enable mineral sands miner Kenmare Resources Plc to
stabilise its production at its Moma mine this quarter,
according to managing director, Michael Carvill.
The Ireland-based company suffered production outages in
2015 as output from the Mozambican power grid was constrained.
As a result of these outages, Kenmare’s ilmenite
production dropped by 11% last year to 763,000 tonnes from
854,600 tonnes in 2014. Heavy mineral output fell to 1.1m
tonnes, compared to 1.28m tonnes 2014.
"We suffered badly from poor electricity supply in the
northern network last year, but the silver lining for this year
is that a lot of that was put to bed in December," Carvill told
IM on the sidelines of Mining Indaba.
Mozambique’s state utility provider,
Electricidade de Moçambique (EDM), added 45 MW to its
existing 118 MW on the grid in December and another 15 MW is
set to come online this year.
Kenmare has made certain onsite adjustments to cope better
with any future outages, including the installation of a motor
that fills in power during spikes and dips in grid supply. It
has also installed a 10 MW diesel generator to keep production
consistent at the plant, even if mining is affected.
Despite its power issues, Kenmare managed to recover more
zircon last year, at 51,800 tonnes – all of which it
sold – compared with 50,800 tonnes in 2014. [Greater
recovery rates in zircon] is our good news story of 2015,
Carvill said, adding that zircon prices remained flat.
The company is in the process of optimising output of all
its minerals at Moma, where it produces ilmenite, rutile and
zircon, Carvill said, but declined to confirm a figure for the
cost of this programme.
Higher slag demand
The company has witnessed an uptick in demand for ilmenite
chloride as feedstock material to other producers looking to
supplement their own ore production. It sees further upside in
this segment of the market in China because of a sharp decrease
in slag production there.
"The sulphate ilmenite market was pushed into oversupply
when the price of iron ore increased, since China produces
ilmenite as a by-product of iron ore," Carvill explained. Since
the price of iron ore has fallen in line with declining Chinese
consumption of the mineral, ilmenite output has also
slipped.
Although China has stockpiles of ilmenite, Carvill believes
these inventories have dropped sharply in the last year and
said he expects some 500,000-750,000 tonnes to drop out of the
market in the near future.
No merger plans
At the end of last year, Australian-based titanium dioxide
(TiO2) producer, Iluka Resources Ltd, withdrew an
offer for Kenmare after it appeared that one of
Kenmare’s major shareholders would not support the
deal.
Carvill said Kenmare has no plans to pursue a new tie-up any
time soon. "We found it attractive at the time to pursue, but
in the end we have our shareholders to consider," he said.