ZimAlloys seeks $5m to revive smelter

Martin Kadzere - Senior Business Reporter

FERROCHROME producer ZimAlloys is seeking $5 million to revive its second smelter, judicial manager Mr Reggie Saruchera said.

“Our target is to refurbish the bigger furnace this year and we will require at least $5,5 million,” said Mr Saruchera in an interview last week.

Last year, the company revived the smaller furnace, which produces an average 300 tonnes of ferrochrome per month.

Mr Saruchera said the company was upgrading the power capacity of the smaller furnace with a view of increasing its smelting capacity.

ZimAlloys, bought from Anglo American plc by a local consortium in 2005, was placed under final judicial management in 2013 due to poor performance attributed to the closure of its four furnaces, poor global metal prices and high operational costs.

ZimAlloys is one of the major ferrochrome producers in the country alongside Zimasco, a unit of China’s Sinosteel Corporation and Afrochine. Zimasco, the country’s largest ferrochrome completely stopped operations at its ferrochrome refinery in Kwekwe late last year after switching off furnace number five and six.

These were the only running smelters as the company had already switched off other furnaces due to low cash flows resulting from subdued international ferrochrome prices.

Zimasco said the decline of global prices has seen the company failing to meet operational requirements. Furthermore, the weak market and regional drought have seen some of the company’s major customers curtailing standing orders. Zimasco has the capacity to produce 180 000 tonnes of high-carbon ferrochrome a year, or 1,2 percent of global production.

Government lifted the ban on chrome ore exports in July last year to enhance the viability on miners and improve the liquidity into the economy. Shipments resumed in November, for the first time since 2011 when Government imposed ban of raw chrome exports.

The ban was meant to encourage beneficiation of the mineral. While the Government had imposed the ban on chrome ore exports to encourage firms to beneficiate the mineral, the suspension had negative impact on producers, particularly small scale miners, some who were forced to shut down due to viability problems.

Small scale miners could not sell their produce due to low smelting capacity in the country, leaving them with stocks of chrome ore and no alternative source of revenue.

The Government had to modify implementation of value addition to allow for ring fenced exporting of stockpiles of raw chrome excess to domestic beneficiation capacity.

About 300 000 tonnes of chrome ore were reserved for local value addition. The exporting of ring fenced raw chrome ore and fines is being undertaken through a Special Purpose Vehicle created by Government to ensure realisation of fair value on exports.

The established SPV is expected to mop up chrome ore from small scale miners and explore chrome ore refining opportunity through tolling arrangements, that way promoting increased value addition.

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