International Ferro Metals Wants Chrome-Tax Clarity by Year-End
International Ferro Metals Ltd. (IFL), a ferrochrome producer in South Africa, said it wants the government to clarify if it will introduce an export levy on chrome-ore exports by year-end.
Ferrochrome producers in the country, the biggest maker of the alloy used in stainless steel to prevent corrosion, have asked for a tax of $100 per metric ton to limit exports to China, which is displacing local output.
“It’s quite urgent,” Chief Executive Officer Christiaan Jordaan said by phone from London today. Any export levy on chrome ore, the main ingredient in ferrochrome, would only be a “temporary arrangement.”
International Ferro Metals’ output of ferrochrome dropped 62 percent to 18,505 tons in the quarter through June from the previous three months as Eskom Holdings SOC Ltd., the state- owned company that provides more than 95 percent of South Africa’s power, paid the Sydney-based producer to shut down furnaces to save on electricity, it said in a statement today.
Eskom raised power prices by 16 percent on average on April 1 and increased them by an average 27 percent in each of the past four years to help fund a building program.
Power-price advances and a weaker ferrochrome market will hamper International Ferro Metals, Cailey Barker and Andy Davidson, London-based analysts with Numis Securities Ltd., said in a research note, cutting their price estimate for the London- listed company by 22 percent to 35 pence.
Demand for ferrochrome is “probably going to remain constant to where it is now” Jordaan said. The company is “keeping an eye on” potential opportunities in Zimbabwe, while South Africa remains its focus, he said.
International Ferro Metals dropped 2.8 percent, the most on a closing basis since July 2, to 13.25 pence by 12:32 p.m. in London.
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