SPOTLIGHT: Brazilian ferro-alloys companies stop as energy prices make production unviable

Brazil’s ferro-alloys and silicon metal output has been reduced to just a handful of companies in early 2015, with most players unable to renew their energy supply contracts and the current high power prices making production unviable.

According to the association that represents the sector, Abrafe, only four of its 17 associates were still operative in the first week of February.
They are Ferbasa (ferro-silicon and ferro-chrome producer); Dow Corning (silicon metal); Anglo American (ferro-nickel, ferro-manganese and ferro-niobium) and CBMM (ferro-niobium).
The data illustrates the complex moment that Brazilian industry is going through, “a very grave, adverse scenario for electro intensive companies”, according to one industry source.
That is the widespread feeling among ferro-alloys producers in Minas Gerais state, most of which saw their 10-year contract with the power company Cemig expire on December 31, 2014.
Under that contract, the companies paid around 70 Brazilian Reals ($ 25.80) per megawatt (MW), according to sources.
But prices have soared as Brazil faces its worst drought in over 80 years, with energy being currently priced close to 400 Brazilian Reals ($ 147.38) per MW.

That was the level Cemig...

Published

Danielle Assalve

February 06, 2015

01:06 GMT

São Paulo