25 Nov 2008 07:00
News Release
25 November 2008
International Ferro Metals Limited
("IFL" or the "Company")
Suspension of production and reduction in sales
International Ferro Metals Limited, the integrated ferrochrome producer, announces a temporary suspension of production at its two ferrochrome furnaces in response to falling demand. Ferrochrome sales will continue to be supplied from the Company's inventory which at 31 October 2008 stood at 38,076 tonnes.
This suspension has allowed the Company to bring forward the 2009 planned maintenance programme which will now commence in December 2008 to coincide with the suspension. Maintenance costs are included in IFL's operating budget and the furnaces will remain closed for maintenance until further notice.
The offtake agreements in place with JISCO and CMC Cometals provide for sales volumes of an average of 14,160 tonnes per month with a minimum term of a further five years and eight years respectively. Both offtake partners have recently confirmed that they will honour the terms of their agreements. Notwithstanding this, as the ferrochrome market conditions in China are worse than in other parts of the world, the Company will immediately suspend sales there until conditions and prices improve. The terms of the JISCO offtake agreement provide for the price to be determined by the European price if a certain minimum level of sales is made by the Company's representatives in Europe in the relevant quarter, otherwise it is determined by the price prevailing at the time in China. Because it is unlikely that sufficient sales in Europe will be made during this quarter, for the first time the price will be governed by the Chinese market. Because of short term events, in particular, a build up of local inventory, the prevailing Chinese price has become significantly lower than the European price and it would be uneconomic for the Company to proceed with such sales until the market price improves.
Commenting on the suspension of production and the outlook for IFL, Managing Director David Kovarsky said:
"International Ferro Metals is financially robust and capable of dealing responsibly with the difficult market conditions by suspending production and deferring sales to China. The decision to bring forward IFL's maintenance programme enables the Company to convert its ferrochrome stock to cash and defer production until a later point when the Company expects to be able to take full advantage of declining input costs for coke, silicon and transport which are expected to continue to fall. As soon as ferrochrome demand recovers, the Company will be ready to resume production and sales."
For further information please visit www.ifml.com or contact:
International Ferro Metals Limited
Stephen Turner, Chief Executive Officer +61 418 440 844
David Kovarsky, Managing Director +27 82 650 1192
Brunswick Group
Patrick Handley / Carole Cable +44 (0) 20 7404 5959
Numis Securities Limited
John Harrison / 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.