August 3, 2011 / 6:27 AM / 7 years ago

UPDATE 2-ENRC Q2 ferrochrome up, running at full capacity

* Q2 saleable ferrochrome output up 3.2 percent

* Saleable iron ore production up 3.1 pct

* Sees production at full capacity in H2 (Adds details, background, quotes, shares)

LONDON, Aug 3 (Reuters) - Kazakh miner ENRC said it expected all divisions to produce at full capacity in the second half, after posting a dip in second quarter iron ore volumes and a 3.2 percent increase in saleable ferrochrome.

Ferroalloys account for roughly half the group’s earnings, and the London-listed company said production of saleable ferroalloys was broadly in line with the first quarter and with the year ago period.

Production of saleable ferrochrome increased to 325,000 tonnes in the second quarter from 315,000 tonnes.

The company said a fire at the Aktobe ferroalloys plant affected electricity supply in June, but all furnaces had resumed full operation by July, meaning there would be only a “limited” loss of production, not material to the division’s full year output.

Iron ore extraction fell 4.8 percent year-on-year, hit by a reduced processing capacity the company blamed on ore mix and repair works, but pellet production rose 3.1 percent to just under 2.1 million tonnes, as steel industry customers continued to shift to higher-cost pellet from concentrate.

“Production in our businesses in Kazakhstan continued at effective full capacity and...the development of our copper and cobalt assets in Africa is progressing to plan,” Chief Executive Felix Vulis said. “Production across all divisions is expected to be maintained at effective full capacity for the second half of 2011.”

Shares in the group were down 0.9 percent at 721 pence at 0730 GMT, outperforming a market shaken by eurozone uncertainty, as several analysts pointed to headline output numbers just shy of forecasts but welcomed the positive outlook for the second half. The broader sector was down 1.9 percent.

“Going into 2012 and beyond we see a compelling operational story with 50 percent volumes growth over 5 years, optionality across a broad project spectrum and potential for margin growth through ferrochrome pricing uptick,” analysts at Liberum said.

“However, despite this morning’s relatively decent numbers once again highlighting the operational quality within ENRC’s portfolio, the clear equity catalyst remains resolution of the board structure and we cannot see an outperformance until the strategic review is complete by the end of summer.”

ENRC also reported primary aluminium production up 8.8 percent year-on-year and in line with the first quarter, as the aluminium smelter was operating a full capacity from May. Electricity generation was broadly in line with the year-ago.

Ferroalloys accounted for 48 percent of 2010 operating profit while iron ore made up 39 percent. ENRC is one of the world’s biggest producers of ferrochrome, a key ingredient in stainless steel.

ENRC released its production report ahead of full interim financial results, due on August 17. (Reporting by Clara Ferreira-Marques; Editing by Kate Holton)

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