Tharisa upbeat as chrome market stabilises
Tharisa produces chrome concentrate and platinum-group metals from a mechanised open-pit mine near Rustenburg
Metallurgical-grade chrome prices were stabilising after a sharp decline to an average $147 a tonne in the June quarter, from $338 a tonne in the March quarter, Tharisa CEO Phoevos Pouroulis said on Monday.
Tharisa, whose major shareholders are the Pouroulis family, produces chrome concentrate and platinum-group metals (PGMs) from a mechanised open-pit mine near Rustenburg. SA owns the world’s largest resources of chrome ore, the price of which dropped 40% in a single day in early May on rising Chinese inventories.
TharisaIn the May Ferrochrome report, Core Consultants MD Lara Smith forecast that prices were unlikely to recover until stocks fell below about 1.6-million tonnes, which might not happen until the fourth quarter of 2017 or later.
At the end of May, total chrome-ore stocks at Durban and Richards Bay had increased to 600,000 tonnes after a number of orders, especially from China, were cancelled. SA exported almost 900,000 tonnes in March.
Pouroulis said in Tharisa’s third-quarter production report although Chinese port stocks were at about 2.34-million tonnes, liquidity had returned on the back of increased stainless steel consumption. "The fundamentals of the global stainless steel market remain sound with continued growth forecast in 2017, further supporting strong demand for chrome units in the form of ferrochrome and chrome ores," he said.
Tharisa’s shares, which have tracked chrome prices, have fallen to R14 from a peak of R28 in November. They added 1c on Monday.
The company produced 6.1% more chrome concentrate in the June quarter at 333.9 tonnes than in the March quarter. Of the chrome concentrate produced, 26% was higher-priced speciality-grade concentrates.
It also increased PGM output 3.2% to 35,400 ounces.
PGM and chrome recoveries were above target. The company realised an average PGM basket price of $792 an ounce, compared with $783 an ounce in March. Pouroulis said more reef was mined during the quarter, reflecting a focus on continuous improvement, especially in drill and blast, and the trend was expected to continue into the fourth quarter.
There was also a focus on processing improvements, particularly crusher throughput and crusher run, which was showing results towards the end of the quarter and would be evident in the current quarter.