Will new projects be hindered by rand appreciation?

摘要

The turnaround in the market for high carbon ferrochrome over the last twelve months has brought with it a spate of proposals for new South African projects. TISCO, Transvaal Ferrochrome and SA Chrome & Alloys in conjunction with JISCO have all indicated plans for new plants, or in the case of SA Chrome & Alloys expansions to its existing operation. However, owing to the appreciation of the South African rand by over 25 percent in the last twelve months we anticipate that the attractiveness of starting up a new project in South Africa has lessened during this time. Even taking into account the massive increase in contract prices, the cost of producing ferrochrome is South Africa has increased. The appreciation of the rand coupled with the winter electricity tariffs has had a direct impact on producer's revenue. In addition, shipping costs have risen on account of the poor productivity at the Richards Bay port, which is used by most of the South African producers for export purposes. Owing to the lack of loading equipment at this port, ships remain in dock for extended periods and, as a result, shipping companies have started to increase charges for producers using this port.