Released: 12/11/2009
http://pdf.reuters.com/Regnews/regnews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20091112:RnsL3827C
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RNS Number : 3827C
International Ferro Metals Limited
12 November 2009
12 November 2009
International Ferro Metals Limited
("IFL" or the "Company")
Annual General Meeting ("AGM") Statement
Tony Grey, Chairman of International Ferro Metals Limited, has delivered the
following speech at the Company's AGM in Sydney, Australia, today, 12 November
2009:
"To afford comfort in a time of great stress Macbeth said, "Come what come may,
time and the hour run through the roughest day."
For the Company, the year that has just passed was a period that called for such
an observation. After several months of ferro chrome stock building by stainless
steel customers, unsettled by interuptions in South African electricity supply
caused by cutbacks, the Global Financial Crisis hit. The twin blows knocked the
ferro chrome producers off balance. To their credit, they promptly reduced
production, led by IFM, in a reaction that was as timely as it was disciplined.
IFM shut both its furnaces, one after the other, in November/08 and temporarily
withdrew from the market. The action, which in retrospect was well advised,
however resulted in a halving of sales for the year and a consequential
deterioration in economies of scale. The previous year's profit before tax of
ZAR 630 million slumped into a loss of ZAR 456 million.
The turbulent conditions prevailing until early 2009 gave way to a gradual
settling down that began to restore confidence in the international financial
system and the world's ability to weather the inevitable recession. This set the
scene for some stability in the stainless steel industry and its requirement for
ferro chrome. Sensing improvement, the Company restarted one furnace in April/09
and the second in August. The restarts occurred smoothly and both furnaces are
currently performing well.
Fortunately, IFM had the financial strength to run through the rough day. To
make assurance doubly sure and principally to provide capital to build a
co-generation plant, IFM raised GBP 22 million through an equity issue in
August.
The plant, which will utilize furnace off gasses to produce about 11% of the
Company's electricity requirements and qualify for carbon credits, is presently
under construction and due to commence operations within 12 months. This
capability will allow IFM to increase production, replacing what was lost
through the power cutbacks by Eskom, South Africa's electricity provider. It
will also afford some protection against inevitable price increases in
electricity.
In the near term, the Company is concentrating on keeping its costs down, a
vital goal at all times, but particularly now, for the strength of the South
African Rand and the rising electricity costs are putting pressure on all South
African producers, not sparing IFM. The ferro chrome price, however, is showing
an upward attitude, as would be expected because South Africa is the dominant
ferro chrome supplier in the world.
The Company is mindful of the recently constructed corporate governance regime
and in response has taken and is continuing to take measures to comply. Two
directors, Terry Wilsteed and Steven Oke have voluntarily agreed to cancel a
provision in their service contracts that would allow them to receive a payment
in the event of a takeover of IFM. With the removal of this right they are now
indisputably independent directors. In addition, the Company is in the process
of bringing onto the board a third independent director.
On behalf of the Board, I would like to express appreciation to Ian Watson who
has recently retired as a director. Ian has served the Company loyally as an
executive and a director for a number of years, indeed since the lead up to the
IPO.
It appears that global economic activity generally is recovering from its
paralysis, indicating that 2010 will be a better year, particularly for
stainless steel and its vital component, ferro chrome.
Nowhere is more important to the Company than China, which has by far the
largest steel industry in the world. The Chinese resurgence has emerged in a
relatively short time to act as a principal vehicle for pulling the world's hard
commodity industry, particularly ferro chrome.
The Company's strategic ally, Jisco, which is listed on the Shanghai Stock
Exchange with a market capitalization of $US 4.5 billion, is a principal player
in the Chinese steel drama. Currently producing 600,000 tonnes of stainless
steel per annum, it will double its capacity by April next year to 1.2 million
tonnes, becoming the third largest producer in China. Further plans would bring
capacity up to 2 million tonnes eventually.
As China is expected to require 50% more ferro chrome over the next decade,
IFM's connection with Jisco puts it in the front ranks to participate in that
part of the ferro chrome market which will probably turn out to have the
greatest growth rate in the world.
It is possible to conclude with confidence that the rough day is over and we can
look forward to a recovery in the demand and price for our product throughout
2010. With its strong financial position, unencumbered by debt, and impeccable
marketing connections, the Company is well placed to participate in the change
in fortune for the ferro chrome industry."
For further information please visit www.ifml.com or contact:
International Ferro Metals Limited +27 82 650 1192
David Kovarsky, Chief Executive Officer
Brunswick Group +44 (0) 20 7404 5959
Patrick Handley / Carole Cable
About International Ferro Metals:
International Ferro Metals produces ferrochrome, the essential ingredient in
stainless steel, from its integrated chromite mine and ferrochrome processing
operations in South Africa. International Ferro Metals is listed on the London
Stock Exchange under the symbol IFL.
Forward Looking Statements
This announcement contains certain forward looking statements which by nature,
contain risk and uncertainty because they relate to future events and depend on
circumstances that occur in the future. There are a number of factors that could
cause actual results or developments to differ materially from those expressed
or implied by these forward looking statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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