Ferrochrome smelters seek power tariff cut

Martin Kadzere Senior Business Reporter
ZIMBABWE’S ferrochrome smelters are seeking an electricity tariff reduction to cushion themselves from depressed global prices, an association representing the industry said. The Confederation of Ferrochrome Industries, with 13 members, has written to Industry and Commerce Ministry to help push for the tariff reduction from 8,5c kWh to 6,3ckWh.

This was after the Zimbabwe Electricity Transmission and Distribution Company proposed a rate of 7,5kWh, which producers say would not help to achieve viability.

CFI vice president Mr Munyaradzi Dube said the depressed global prices were hurting their operations, which has forced over two thirds of member businesses to close shop.

“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.

ZETDC managing director Eng Julian Chinembiri said the company proposed the rate of 7,5c kWh, which has been submitted to the Zimbabwe Energy Regulatory Authority for approval.

“From our discussions, yes, that is what we proposed,” said Eng Chinembiri. “But ZERA will have the final say and they haven’t come back to us with the final position.”

Average prices have declined from $2c per pound on the international market and are currently at 75c per pound.

“We have 13 members of which nine have closed down; two of them are in judicial management. It is not a healthy situation for the industry,” said Mr Dube, who is also the managing director of the Zimbabwe Alloys, one of the largest producers.

Industry and Commerce Minister Mike Bimha could not be reached for a comment as he was said to be out of the country.

In the 10 months to October, ferrochrome producers, used in the production of stainless steel, produced 15 300 tonnes valued at $144,5 million, according to Chamber of Mines.

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 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 Reggie Saruchera said in Nov last year. The company needs about $30 million for its three furnaces.