Unsustainable power tariffs affecting ferrochrome producers

By William Milasi

The country’s ferrochrome have said government must intervene in the current power tariffs structure as the high prices are greatly affecting their operations.

Zimbabwe Mining and Alloy Smelting Company (ZIMASCO) General Manager Marketing and Administration Clara Sadomba said there is need for an adjustment on the current power tariffs structure.

Currently the tariff for large-scale producers such as ferrochrome smelters is 6, 7 cents per kilowatt hour.
Ferrochrome producers are crying for a downward review to at least four cents per kilowatt hour.

“In our cost structure electricity is the biggest contributor to our cost of production, so it is a major cost driver of our profitability. Given that we deal in a commodity, where we are price takers and where the global market price fluctuates for reason beyond our control, it is important to manage our production cost and as an industry we continue lobbying government to reduce the cost of power to improve our competitiveness,” Sadomba said.

Zimasco has maintained that after emerging from voluntary judicial management earlier this year operations at the company are currently stable.

However, Sadomba has said since chrome is a commodity which fluctuates on the global market there is need for recapitalization and modernization of operations.

“To assist in improving margins, there is need for recapitalization and modernization of certain areas of mining and smelting business as well as introduction of new technologies,” she explained.

Generally the production of ferrochrome is a very marginal business in the country.

The marketing explained that, “Zimbabwe ferrochrome producers are vulnerable to global market forces as the volumes we produce are vulnerable to global market forces as the volume we produce is insignificant compared to the production in the rest of the world by major players such as China and South Africa. We are therefore price takers. When prices fluctuate on global markets as they tend to do frequently Zimbabwean ferrochrome producers are negatively impacted due to the very small margins that we operate with,” she said.

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