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trata-Merafe chrome JV at reduced capacity

26 Jun 2012
JOHANNESBURG - The Xstrata-Merafe Chrome Venture is operating at half of its capacity as higher power costs and mining inflation eats into margins, Merafe Resources said on Tuesday.

Merafe, which holds a 50% stake in the venture with Xstrata, said in a statement it will only be operating eight out of twenty furnaces from June to August, South Africa's winter months.

"Ferrochrome production for the winter months is envisaged to be in the region of 40% to 50% of installed capacity,' it said.

The ferrochrome producer in March said it struck a deal with state-owned utility Eskom to shut seven of its furnaces until the end of May and allow Eskom to buy back the energy that the plants would have otherwise consumed.

These shutdowns were expected to have cost the company 130 000 t of production in the first and second quarters.

The joint venture's total ferrochrome production in 2011 was 263 000 t, which represented 65% of installed capacity.