ENRC sees increased iron ore and ferroalloy outputs in Q1

Thursday, 13 May 2010 17:05:47 (GMT+2)

Kazakhstan-based mining group Eurasian Natural Resources Corporation Plc. (ENRC) has announced that in Q1 2010 its ferroalloy and iron ore divisions continued to operate at effectively full capacity, with production volumes for the first quarter being significantly ahead of those in Q1 2009, which was affected by cutbacks initiated in Q4 2008 in response to the downturn.

Accordingly in Q1 2010, ENRC's total ferroalloys output increased by 76.3 percent to 446,000 mt, including 345,000 mt of ferrochrome - up 70 percent, its iron ore extraction went up by 61.7 percent to 10.7 million mt, its primary iron ore concentrate production increased by 59.4 percent to 4.2 million mt, and its saleable pellet production went up by about 182 percent to 2.17 million mt, all compared to Q1 2009.

"There was a small decrease in primary concentrate, saleable concentrate and pellet production compared to Q4 2009. This reflected the lower grade of ore mined and processed and adverse weather conditions affecting the transportation of ore to the processing plant, as well as there being fewer calendar days in Q1 2010 than Q4 2009," reads the company's statement.

ENRC also stated that in Q1 2010 its revenue increased significantly compared to Q1 2009, primarily reflecting higher production and sales volumes in the ferroalloy and iron ore divisions. The Q1 revenue of its ferroalloy division also saw good growth relative to Q4 2009, due to higher prices and sales volumes, excepting chrome ore sales for which deliveries to China were affected by adverse weather conditions in early January. Average ferroalloy prices in Q1 2010 increased one percent on the comparable period and were six percent higher against Q4 2009.

Meanwhile, ENRC's iron ore division's Q1 revenue increased substantially year on year due to significantly higher sales volumes, despite lower average sales prices. There was also a shift in the business mix; revenue from iron ore concentrate sales saw a marked decline whilst pellet revenue increased significantly, reflecting a recovery in demand for the higher priced product. Compared to Q4 2009 revenue was modestly higher, reflecting higher prices, partially offset by lower volumes. Average iron ore sales prices in Q1 2010 fell eight percent year on year, but increased nine percent compared to Q4 2009 as a result of higher Chinese prices.

As regards future, ENRC said that the realized prices for the full year for ferrochrome and iron ore are expected to be well ahead of 2009; however, the pace of recent price increases is unlikely to be sustained through the remainder of the year.

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