FerroAtlántica Group SA has stopped all silicon production at its facilities in South Africa for April and May, according to a company release.

The move comes after the Madrid-based silicon producer announced plans in December to close two of three furnaces at its Polokwane plant in northeastern South Africa and another at its Rand Carbide facility, in response to market conditions and a challenging energy supply situation in the country.

Ferro-alloys suppliers have been asked to sell electricity back to South Africa’s power grid because of concerns about generating capacity.

The most recent shutdown became effective on April 1, according to one source familiar with the situation.

"It just makes sense to sell (energy) back to the grid" rather than produce metal, he said.

A second source agreed that it was more profitable at present to sell electricity back to the grid, given the cost of making and shipping material as well as the additional costs and uncertainties associated with selling it.

FerroAtlántica said it had slashed silicon production at Polokwane and Rand Carbine by 60% in the first quarter. With the additional shutdowns announced for April and May, production in the first five months of 2013 is expected to fall by 22,000 tons of silicon and 8,000 tons of ferro-silicon, the company said in an undated press release.

FerroAtlántica said it continues to be "positive about the longer-term market outlook for silicon" and reiterated its commitment to South Africa.

The company expects to bring back some of the idled capacity by June 1, the source said.

Production curtailments in South Africa and Brazil may have helped firm up silicon prices in North America, the second source said. Solid demand from the North American automotive sector for aluminum alloys that include silicon has also helped to bolster demand, he said.

This report was first published by American Metal Market