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At 11:30 UK time, executives from some of the world’s largest ferro-chrome producers will be discussing the market at Metal Bulletin’s 28th International Ferro-alloys Conference in Berlin.
Chairing the panel is Mark Midgley (MM), sales & marketing director, ENRC.
Alongside him on the panel are:
Robert Yildirim (RY), president & ceo, Eti Krom;
Alistair Ruiters (AR), ceo, Ruuki;
Phoevos Pouroulis (PP), ceo, Tharisa Mining;
Mauri Kauppi (MK), general manager, sales & marketing, Outokumpu Chrome;
and Jurgen Schalamon (JS), ceo, Samancor.
1134: MM: What about the SA export tax on ore?
1134 PP: PP it’s our view that there will be no export tax- It contravenes fair trade practices
1134 JS: there’s a chance to regulate our South African production in our markets- we’re all faced with the same problem
1147 MM: china’s doing very good job of widening its sources of ore
1148: MM: so no quick fix but even if there wasyou’ve got a bit of a problem?
1139: PP: SA will always provide the base line chrome unit supply fro, geological resource point of view
For the first time we’re identifying it as a universal problem
JS luckily i’m not employed by eskom. they will be constrained if they dont buy th power bac
JS: Eskom have good ideas and they come up with nice strategies but it’s not in the execution
1143 People have to be creative and go for own generation. 16% rise in power prices is another doubling of my power prices
RY: If there was enough power in an ovrsupplied market they would go bankrupt
RY: FeCr producers should be thanking Eskom
MM: Looks ke Eskom is going to do another buyback over the next few months?
AR frankly it makes more sense to sell back to eskom than to produce at the moment
AR maybe the word crisis should not be used but that’s the realoty: we have a power criris
AR: we have been thrown another lifeline
1149 AR for the foreseeable future I don’t see any new generation coming on stream
AR what we have to look at going forward is a new model for supplying ourselves with generation base load capacity for the ferro chrome industry
AR: we also need to look at co-gen
AR you can’t use this as a basis to declare force majeure
1150
AR There are conditions that come up in the Eskom greements 1., you can’ make a press statement 2. you can’ make lay offs
MM: What is the short-medium term outlook for social unrest?
PP we’re going to see more unrest in the near future-the outlook is negative
PP: no longer about wage negs it’s a much bigger theme
PP I don’t see it disappearing
PP we’re hoping government will take a firm stand and deal with the issue head on
Our problems in SA are twofold
AR: the action has come from some of the lowest paid workers
AR we have a mining industry that has done a lot to transform itself since the 1980s but not enough to transform the socio economic conditions of low paid workers
AR: We have seen a number of issues tha had not been resolved come to a head
AR: if any of you saw the pictures of Marikana you were probably shocked at the conditions
AR One failing of local government around the mining towns has been the ability to provide housing and sanitation
AR: to blame the mining houses is unfair; gov must take its fair share of responsibility
AR we’re going to continue to see the South African mining industry continue to be unstable
JS: a lot of problem can be solved before it blows up
MM: Someone in the audience is going to like the question. What is the future of the benchmark?
MK: I’d ask why not the benchmark? It gives more stability to have a quarterly basis I don’t see in the near term it will disappear
RY: Benchmark has lost its meaning
RY: Stainlessmills are just using it for their alloy surcharge
RY: Media quotations like MB are healthier. If we keep it we will be like dinosaurs. For me the benchmark is history
MM: One cld argue that the benchmark has been the downfall of the European stainless industry. Maybe a bmark could be sustainable – does the industy need to learn to stop discounting nd destroying value
RY: Outokumpu shld make their strategy clear. We wiil not use the bencmark in our longterm contracts.
MM: the customers know the system as well
RY: After Inoxum takeover for me the benchmark will lose meaning it will be onesided
I’ll not use it in long term contracts
RY: Stainless inustry cannot do without chromiumWe#re all business men. We work for monez and I wnat to put my money into the ferrochrome industry
MM: Phoevos you were considering investing in China. Do you think the country will conform to Western standards
PP: We have put our project on hold
PP: But there seems to be no abatement in China’s ambitions to increase production
MM: Jurgen, who will be the movers and shakers in reshaping the industry?
Consolidation is necessary but you need to be sure you have the strategy to optimise
JS: There is a lot of potential and new ideas
JS: There has to be an aligned view from all players
JS: SA sometimes moves to slow
JS: In 2008 I mentioned companies were in talks to build a joint power plant
JS: The idea is four years old and didn’t come through
JS: We shouldn’t talk too much we should execute AR: Eskom is the mover and shaker
JS consolidation is necessary but you have to be extremely careful
JS There’s a lot of potential still there in SA and a lot of ideas, but they’re maybe not workable
JS There has to be in SA a key sense of an aligned view from all chrome players
AR who’s the move and shaker? Eskom
AR single channel marketing is the one instrument that at the moment is undermining issues around supply and demand
AR cash is worth more in your pocket than buying a ferro chrome business
PP China is getting close to western standards but the challenge is the existing installations
JS the legislation is western but the execution, sometimes not. with 1.3 billion people China can’t ignore environmental issues
MM we need to prepare for even more fierce competition from China
AR some of the ferro chrome producers are the biggest culprits in terms of exporting ore to China. They’re displacing revenue