Afarak welcomes signs of ferrochrome market improvement

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Afarak Group PLC (LSE:AFRK, FRA:V5W) says markets for ferrochrome are starting to pick up and it expects a more stable business environment in the second half of 2021.


Revenues at the miner in the six months to end June rose slightly to EUR37.3mln (EUR35.5mln), while losses further reduced with a deficit of EUR500,000 against a EUR4.1mln a year ago.


Higher prices helped sales improve even with a 48% drop in the amount mined at 53,500 tonnes and the amount of processed material sold, which dropped 46% to 12,700 tonnes.


Afarak said the ferrochrome market is closely bound to the stainless-steel market, where prices have been rising strongly over the first six months of 2021.


Measures are now being implemented to curb the rise in steel prices, which have included an export tariff in Russia on ferroalloys while most Chinese ferrochrome producers have left the spot market, it said.


Guy Konsbruck, Afarak’s chief executive, added: “During the first half of 2021, the company continued to go through difficult times. It is only towards the end of the period that we saw first signs of improvements.


“Nevertheless, we succeeded to reduce our debt despite a very constrained cashflow situation. Our specialty segment remained profitable despite very difficult markets.


“A starting price increase was unfortunately accompanied by rises in logistic cost, higher raw material cost and unfavourable USD exchange rates. We foresee further improvements in H2. The FerroAlloys segment continued to be weak, as the mining activity in South Africa was further reduced.


“The company is expecting proceeds from the Mogale Business Rescue and the disposal of one of its South African Mining Assets. These inflows should improve the company’s cashflow situation and we will be in a position to focus on further debt reduction.


“The raw materials and stainless steel markets are seeing a general positive trend finally, and we expect to be able to see a more stable business environment throughout the rest of the year.”


Net debt at the end of the half-year was EUR50.3mln.

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