THE suspension of 80% of the Xstrata-Merafe joint venture’s ferrochrome capacity may not be enough, considering the buildup of ferrochrome stockpiles and the slowdown of production in the stainless steel industry, Samancor Chrome chairman Dankor Konchar said on Friday.

Samancor Chrome has suspended 100% of its capacity since early last month until March 1, when the situation will be reviewed, he said.

Late last year a smaller producer, International Ferro Metals, which is listed on London’s AIM but operates in SA, also suspended all operations until March and said it would use the downtime for maintenance. Other producers have suspended 50% or more of capacity since early last month.

The Xstrata-Merafe joint venture is the biggest ferrochrome producer in the world, with about 20% of the market, followed by Samancor Chrome with about a 13% market share.

SA is the world’s biggest ferrochrome producing country.

Xstrata Alloys said it had suspended operation of another six furnaces, adding to the 11 suspended last month , because of current market conditions. That meant that 1,37-million tons or 80% of operating capacity had been put on hold.

No retrenchments of permanent employees was expected, which meant the joint venture could return to capacity quickly when market conditions allowed, it said.

Konchar said Samancor Chrome, which employs about 6500 people including contractors, would do everything possible to avoid retrenchments.

The company was in discussions with the unions and various options, such as working shorter hours, would be explored.

Samancor Chrome had responsibilities to both employees and shareholders, he said.

London-based investment house Fairfax said in a note to clients that the closure of further furnaces showed the poor state of the market. It expected ferrochrome producers could remain shut for the first six months of this year while the stainless steel industry worked through stockpiles.

Konchar said he had never seen conditions as bad as this in the ferrochrome industry.