Power issues frustrate International Ferro

Indeed, the group successfully completed an essential furnace roof rebuild - although the consequent disruptions reduced ferrochrome production by 15 per cent in the half to 85,779 tonnes. Full-load throughput at the group's furnaces wasn't restored until midway through the period, although there has already been a marked improvement in furnace availability. And, despite the production shortfall, higher sales volumes were still achieved - mainly due to expansion into the Asian markets. Moreover, development of open-pit operations at the group's Sky Chrome mine is progressing according to plan, while efforts are also being focused on expanding underground production at Lesedi.

But, while improved furnace availability and fixed cost savings are feeding through into lower unit costs, South African electricity prices - and supply - remain big worries. Specifically, state power company Eskom needs to improve the country's national grid and has offered to acquire electricity allocation from energy-intensive users such as International Ferro. That could come with a hefty level of financial compensation and analysts think management is likely to do such a deal with Eskom - but, longer term, the capacity constraints that may come with it could prove problematic.