News

March 18, 2009

The Chrome And Ferrochrome Markets May Be Shot To Pieces, But Chromex Mining Remains Resolutely Cash Flow Positive

By Alastair Ford

It’s not a deal-breaker, but it’s probably fair to say that the website for Chromex Mining needs a little updating - the company’s home page talks confidently of positioning Chromex to “take advantage of the robust demand in the ferrochrome and stainless steel markets”. Ah, would that these markets were indeed “robust” – it’d be a sure sign that many of our current troubles were nearing an end. The following statement, contained in today’s market commentary from broker Fairfax, gives a more realistic picture of how people in the chrome and ferrochrome space are feeling at the moment: “Steel producers have acted shamefully and in some cases illegally”, says Fairfax, “by refusing contracted ferrochrome shipments causing ferrochrome spot prices to collapse and producers to shut production capacity. Some producers have agreed settlements in return for some sales while others may fund ongoing litigation". The broker goes on to say that: “While we are realistic over the difficulties being experienced in the, largely shut, ferrochrome industry at present, we are also hopeful that producers will be able to restart some furnaces around end H1 and that the ferrochrome industry should slowly begin to return to normal production towards the year-end”. No, not exactly a “robust” environment. Not even close.

But whatever the company’s website says, Chromex’s chief executive Russell Lamming is under no illusions as to the state of the markets. He only wishes he could call the recovery, but, he says, “I don’t have that crystal ball”. Still, Fairfax’s positive pronouncements about the return of “normal production” for ferrochrome will come as some comfort, and Russell doesn’t mind saying that the Chromex team is “still very confident in the medium to long-term”. As a pure-play chromite miner, Chromex...