[miningmx.com] — Kazakh miner ENRC, which recently invested in the Congo’s Central African Mining and Exploration (Camec), said demand for stainless steel had recovered from last year’s downturn, bringing strong growth in the second-quarter output of its two most important products, ferroalloys and iron ore.
“We are operating at effectively full capacity in all divisions and remain focused on the control of unit costs whilst continuing to closely monitor the level of demand for our products,” said Chief Executive Felix Vulis in a statement.
He said the firm – one of the world’s biggest ferrochrome producers – was churning out more material in its core units than at the same time two years ago, before the downturn sparked production cutbacks due to a slump in demand and prices.
ENRC released its production report ahead of interim financial results due on Aug. 18, which are expected to show surging profits on higher output and prices.
Interim earnings per share are expected to nearly double, according to a consensus estimate by Thomson Reuters I/E/B/S, based on the forecasts of four analysts, polled before the production report was released.
Analysts said the output figures were largely in line with expectations but Credit Suisse said ferrochrome prices may lag other commodities over the next six months.
“We remain cautious over near-term earnings momentum, however, we continue to like the longer term value case… A strong balance sheet and expandable assets provide the growth potential that could reach 10% per annum,” Credit Suisse said in a note.
ENRC shares had gained 0.6% to 945 pence by 07:47 GMT, bucking a weaker trend in the sector, which saw the UK mining index down 1.2% on softer metals prices.
Ferroalloy output jumps
ENRC said production of ferroalloys, a key ingredient in stainless steel, jumped by 40% year-on-year to 465 000 tonnes and output of iron ore pellets surged 62% to 2.04 million tonnes in the three months to the end of June.
The ferroalloys division accounted for nearly half of core earnings last year while iron ore made up a third.
In May, the group reported a strong rebound in first-quarter output as demand for stainless steel recovered and said revenue growth this year would outrun rising costs.
Production of alumina, the raw material to make aluminium, rose 2.5% to 409 000 tonnes and output of aluminium soared 90% to 57 000 tonnes as it ramped up the Phase 2 expansion of its aluminium smelter.
Since May, the smelter has been operating at full annual capacity of 250 000 tonnes.
The group, which has added copper to its portfolio following its takeover last year of Camec, posted output of 5 175 tonnes of copper cathodes, up from 4 152 tonnes in the first quarter.
Kazakh rival Kazakhmys is the biggest shareholder in Eurasian Natural Resources Corp with a 26% holding.
