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Martin Kadzere Senior Business Reporter—
The Zimbabwe Electricity Transmission and Distribution Company has reduced power tariff for ferrochrome producers by about 21 percent to improve their viability. Ferrochrome smelters sought tariff reduction to cushion themselves from depressed global prices. Industry sources told this newspaper that ZETDC and ferrochrome producers agreed on 6,7cents per kilowatt-hour from 8,5 cents per kilowatt hour.

“A compromise was reached on the electricity charges for smelters; ZETDC had offered a rate of 7,5 cents kWh while producers wanted the tariff reduced to 6,3c kWh,” said the source who declined to be named citing confidentiality nature of the matter.

ZETDC managing director Engineer Julian Chinembiri could not be reached for comment by the time of going to print yesterday.

No comment could also be obtained from the Confederation of Ferrochrome Industries president Mr Reggie Machiya as his mobile phone was not reachable while his deputy Mr Munyaradzi Dube declined to comment on the matter. The CFI has 13 members.

But in an interview with this newspaper early this year, Mr Dube said the depressed global prices were hurting their operations, which has resulted in over two thirds of their members closing down.

“Forty percent of our input costs are electricity and with low prices prevailing on the world markets, this has piled a lot of pressure on the local producers,” said Mr Dube.

“We have 13 members of which nine have closed down; two of them are in judicial management. It is not a healthy situation.”

HSBC cut its 2015 ferrochrome price forecast by 7 percent, saying rising production costs have yet to build price support, according to media reports.

The bank is forecasting $1,12 per pound in 2015 from $1,20 per lb and a level of $1,18 per lb in 2016.

“First-quarter 2015 European benchmark contract prices settled at $1,08 per lb, down 6 percent quarter-on-quarter and down 8 percent year-on-year, which demonstrates weak near-term market fundamentals, in our view,” said HSBC.

Zimbabwe, alongside South Africa, holds about 90 percent of the world’s chromite reserves and resources, according to the US Geological Survey.

It has three large-scale ferrochrome producers, including Zimbabwe Alloys and Zimasco, owned by China’s Sinosteel Corporation.

The country has smelting capacity of 700 000 tonnes per annum, according to the federation. Zimasco has half of the capacity.

ZimAlloys, the second largest, is currently under judicial management and is talking to various potential investors to rebuild its furnaces, judicial manager Mr Reggie Saruchera said in November last year. The company needs about $30 million for its three furnaces.