World News: 03:00 GMT Friday 10th August 2018. [Afarak Group Plc via Globe Newswire via SPi World News]
07:00 London, 09:00 Helsinki, August 10, 2018 - Afarak Group Plc ("Afarak" or "the Company")
The third quarter is typically driven by seasonal effects. During the summer period in the northern hemisphere, general activity tends to slow down. In the southern hemisphere, winter shut-downs are scheduled for maintenance. Quarter three ferrochrome benchmark price contracted to USD 138 c/lb, from USD 142 c/lb in quarter two. Hence it is higher than in quarter three 2017. On the other side, Chrome Ore prices in China have already contracted below levels of USD180/MT in July and August
“The second quarter presented some serious challenges for Afarak, mainly concerning the operations in South Africa. Unfortunately, our mining teams in Stellite and Mecklenburg came across some difficulties throughout the quarter. As a mining company, we cannot always predict the geology. The unexpected quality of ore mined affected downstream processing at Mogale, cost of production and pricing of both mined and processed materials. In addition, the unfavorable exchange rate movements also impacted our bottom-line.
The interplay of these factors led to an overall poor financial performance in the FerroAlloys segment. The growth in revenues we achieved, despite lower prices compared to a year earlier, did not translate into improved profitability.
The Specialty Alloys business segment fully met our expectations. The mines in Turkey continued to perform well and the additional plant investments have led to an increase in productivity and outputs. Processing levels at our EWW plant in Germany continued to increase. We also enjoyed increased demand for our products. Currency exposures, particularly the weakening of the US Dollar, negatively affected our profitability, though.
In South Africa, the financial performance of the FerroAlloys segment heavily impacted the Group’s results. Operational issues, which were beyond control of local and Group management, lead to this unsatisfactory situation. As a natural resource company, we are dependent on the resources we mine. Unfortunately, during the quarter, our mining teams came across inferior quality ore bodies which led to a number of challenges throughout the processing stages and also when selling the end products.
On behalf of management, I would like to thank the teams across all our operations especially the teams in South Africa for their commitment and effort during this challenging period. Local management was aligned to optimize solutions and focus on cost-cutting and control initiatives.
Despite the challenges, Afarak continued with planned investments and project development and remained committed towards sustainability. During the quarter we continued with our efforts to invest in health and safety and it is with great satisfaction that we report that the safety performance in South Africa has improved considerably. We remain determined to protect our workers across our plants and business units. Our commitment to support local communities in their socio-economic development remains unaltered as we continued to support a number of initiatives.
Moving forward, the third quarter always presents seasonal challenges to the industry. The market remains highly volatile. Although quarter three ferrochrome benchmark price contracted to USD 138 c/lb, from USD 142 c/lb in quarter two, it is higher than quarter three 2017. From an operational perspective, Mogale will be operating without furnace number 3, due to an unexpected maintenance activity. Mining activity will be adapted to the present poor demand. We will continue to prepare the underground operations in Mecklenburg. Our PGM plant project is completed and we will start production during the quarter, adding to our product range and further diversifying our revenue streams. Mogale has also completed two important investment projects, starting to operate its own metal recovery plant and a foundry grade chrome ore concentrate producing plant, in this quarter. Both these plants are expected to make a positive contribution to our revenues and profitability going forward”
The Interim Report for Q3 will be published on Friday 16 November 2018 and the closed period will be between 16 October and 16 November 2018.
For additional information, please contact:Guy Konsbruck, CEO, +356 2122 1566, Jean Paul Fabri, +356 2122 1566,
Financial reports and other investor information are available on the Company's website: .
Afarak Group is a specialist alloy producer focused on delivering sustainable growth with a Speciality Alloys business in southern Europe and a FerroAlloys business in South Africa. The Company is listed on NASDAQ Helsinki (AFAGR) and the Main Market of the London Stock Exchange (AFRK).
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Globe Newswire: 03:00 GMT Friday 10th August 2018
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