21 Nov 2012 07:00
21 November 2012
International Ferro Metals Limited
("IFL" or the "Company")
Chairman's Address at the 2012 Annual General Meeting of Shareholders
During the last financial year and the subsequent period to date, the Company has achieved much. In reaction to the head winds blowing against the ferro-chrome market, it has taken vigorous measures to reduce costs, and has been successful.
It developed the adjoining Sky Chrome orebody, accomplished efficiencies in the Lesedi mine, and agreed with Rustenburg Platinum Mines Ltd to finance the construction of a UG2 chrome retreatment plant for the production of chrome concentrates. The plant was built and is now operating. From it the Company can obtain up to 30% of its beneficiated ore requirements, or, at its election, sell all or part of that, where advantageous.
The performance of the smelters has improved markedly as the result of the successful roof repairs carried out and the change in the reductant mix by partially substituting anthracite for expensive coke.
The co-generation plant was installed and is now supplying a significant amount of the Company's power needs. This not only reduces electricity costs but acts as a buffer in the event that Eskom ever decides to cut back supply.
Notwithstanding these important achievements however, the weakness of the ferro-chrome market, which saw a downward trajectory in prices, resulted in a loss of ZAR 72 million for the year. Disappointing though that is, shareholders can take some comfort in the fact that it represents a significant reduction from the ZAR 214 million loss the previous year.
Fortunately, but not entirely, the Company was spared the wave of strike action that buffeted the South African mining industry. The Company's mines and smelters per se were not affected but the supply of UG2 was interrupted to some extent, as Rustenburg had to cope with industrial action. Also, the transport strike had a minor effect.
A word of support for South Africa is appropriate here. While the turbulence is clearly unsettling to foreign investors, the reaction in certain quarters abroad has been overdone. There are signs that industrial disturbance, while still present, is subsiding. South Africa remains an internationally reliable supplier of minerals at a competitive cost structure, including of course ferro-chrome, and will continue to be.
That said, the rise of Chinese ferro-chrome production is threatening South Africa's dominance in that industry. China now supplies as much ferro-chrome as South Africa. However, Chinese smelters labour under a significant vulnerability. They are dependent on South African ore as they have no supply at home. As it is the largest contributor to costs, they are hostage to increases in the price of ore or interruptions in its supply.
As we look to 2013, past the U.S. fiscal cliff, the leadership change in China and the continuous struggling in Europe, the picture is cloudy. However, barring game changing events, it is possible to see stainless steel production in China increasing at an impressive rate - industry observers estimate 5% per annum compounded. That, together with continuing efforts at cost control, should result in healthier conditions for the South African ferro-chrome industry and the Company's fortunes.
ENDS
For further information please visit www.ifml.com or contact:
International Ferro Metals Limited Chris Jordaan, Chief Executive Officer |
+27 (0) 82 653 1463 |
Brunswick Group Carole Cable |
+44 (0) 20 7404 5959 |
Numis Securities Limited James Black / Alastair Stratton / Stuart Skinner |
+44 (0) 20 7260 1000 |
About International Ferro Metals:
International Ferro Metals produces ferrochrome, the essential ingredient in stainless steel, from its integrated chromite mine and ferrochrome processing operations in South Africa. International Ferro Metals is listed on the London Stock Exchange under the symbol IFL.
Forward Looking Statements
This announcement contains certain forward looking statements which by nature, contain risk and uncertainty because they relate to future events and depend on circumstances that occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements.