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| Strategy For Chrome Business Is Heard From Top Executive Of Eti Krom / Turkey |
| = From Mr. Yildirim, Who Is President And CEO Of Eti Krom And Came To Japan |
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Mr. Robert Yuksel Yildirim, President and CEO of Eti Krom Inc. as one of major enterprises in Turkey, came to Japan and had an interview with our pressman (Mr. H. Saito) on the 24th of July at the Imperial Hotel in Tokyo. At this meeting, in form of replying to the questions from our pressman, Yildirim President and CEO of Eti Krom explained about the strategy for chrome business and the projects to expand capacities for chrome production with the followings. In the course of this interview, Mr. Yildirim emphasized that, by means of utilizing the advantages of high grade lumpy chrome ore mined in Turkey and high technology for production of ferro-chrome developed by Vargon Alloys of Sweden, an affiliated company of the Yildirim Group, Eti Krom will set up the structure to attach an importance to production and sales of high grade and high quality high carbon ferro-chrome with lower impurities. (1) The Yildirim Group has been operating such diversified businesses as mining, fertilizer, chemicals, coal, energy, port management, marine transport, shipbuilding, and so on and has now entered into chrome business. In line with the policy adopted in September of 2004 by the Government of Turkey, which state-owned enterprises were privatized, the Yildirim Group has taken over Eti Krom. In addition, the Group has also acquired in February of 2008 Vargon Alloys AB (VAAB) of Sweden, having succeeded in an expansion of the capacity to produce ferro-chrome. Yildirim Group (with consolidation of Eti Krom and VAAB) has aimed to become the second largest producer of high carbon ferro-chrome (with high Cr content and lower impurities) in the world, following ENRC (Eurasian Natural Resources Corporation) of Kazakhstan. (2) Eti Krom is in the direction to increase production of ferro-chrome and has intended to set up in 2010 the structure to produce 400,000 tons per annum of ferro-chrome in total of the quantities produced in plants of Turkey and Sweden. In order to achieve this target, the production of high carbon ferro-chrome in Turkey is scheduled to increase to 145,000 tons per annum by September of 2009. At present, Eti Krom has the capacity to produce 50,000 tons per annum of high carbon ferro-chrome but constructs two new semi-closed type electric furnace (2 x 30 MVA) manufactured by SMS Demag in Germany with its completion in September of 2009 and these new furnaces have the capacity to produce 95,000 tons per annum of high carbon ferro-chrome. (3) Also, Vargon Alloys of Sweden has planned to strengthen the structure for production of ferro-chrome. One electric furnace, which so far produced ferro-silicon, is reformed to produce ferro-chrome. By this conversion of one electric furnace, the capacity to produce ferro-chrome in Sweden is increased by 65,000 tons per annum in comparison with that at present. In addition, Vargon Alloys has been producing charge chrome by one very large electric furnace (105 MVA) but is now scheduled to be converted to produce high carbon ferro-chrome by means of relining this furnace by end of 2008. Vargon Alloys has held four electric furnaces and so far has been producing ferro-chrome and ferro-silicon. However, this Swedish producer will hereafter operate all of these four electric furnaces to produce high carbon ferro-chrome. Accordingly, Vargon Alloys will be able to produce 220,000 tons of ferro-chrome per annum as of 2009. Furthermore, both plants in Turkey and Sweden have slag-recovery operations to recover ferro-chrome from slag and the total quantity of ferro-chrome to be recovered at these two plants will come to about 30,000 tons per annum. In consequence of these arrangements, the Yildirim Group will be able to set up the structure to produce approximately 400,000 tons of high carbon ferro-chrome per annum as a whole from 2010. Vargon Alloys has been producing special grade charge chrome with lower phosphorus content and the production of this charge chrome is maintained for only specific customers with long term contract. (4) The matter to secure supply of electric power has been steadily progressing. As announced on the 7th of July, Vargon Alloys has concluded the long term contract for 10 years with Vattenfall AB, a state-owned electric power corporation, on supply of electric power and is able to receive stably 5 TMh of electric power for the next 10 years. In Turkey, Yildirim Group has been proceeding the project to construct an independent thermoelectric coal-fired power plant with capacity of 600 MW in Gemlik town of Bursa city located in coastal industrial zone and the permission to construct this plant is expected to be granted by end of 2008 by the Turkish Government. (5) Eti Krom is a major producer of high quality chrome ore and scheduled to produce 800,000 tons per annum of high quality chrome ore in 2009 by an increase of 15% from that in 2008. For a reference, the total quantity of chrome ore to be produced in Turkey for the next year of 2009 is estimated to be at 2,000,000 tons. Until Yildirim Group has taken over Vargon Alloys, Eti Krom had maintained an advantage on exports of chrome ore by means of operating enough money for stocks of chrome ore. Such rivals as Albania, Iran, and so on, where also produce high grade chrome ore, have to decrease their production of chrome ore in winter season and, therefore, price of chrome ore for export rises in a period of November to March. By taking a chance on this season, Eti Krom has positively exported high quality chrome ore at higher prices. However, after Yildirim Group has acquired Vargon Alloys, the strategy of Eti Krom for sales of chrome ore has changed. In the next year of 2009, the demand of Vargon Alloys for chrome ore from Eti Krom is estimated to be around 400,000 - 500,000 tons per annum. On the other hand, when Eti Krom's own consumption is to be considered about 200,000 tons of chrome ore in the same year, the net quantity of chrome ore anticipated to be exported from Eti Krom will come to a level of 100,000 - 200,000 tons in 2009. Therefore, the quantities of chrome ore to be exported from Eti Krom to Russia and China will be limited. However, in order to keep a further flexibility on its exports of chrome ore from Eti Krom and to maintain its global market-making position, Yildirim Group is now considering to adopt new marketing strategy to have a substantial range in transactions of chrome ore by means of importing chrome ore from Albania, Madagascar, Oman, Iran, and so on into Sweden. It is also desirable for Eti Krom to have important volume of chrome ore stocks possible to extent its role in the international chrome ore market. (6) In the same case as that of other enterprises in the world, Eti Krom has attached an importance to the Chinese market. However, from Yildirim Group's point of view for entering into the Chinese ferro-chrome market, it will take place from 2010 by Eti Krom. Some Chinese ferro-chrome enterprises have already approached to Eti Krom with proposals of establishing a joint venture to produce high carbon ferro-chrome in China. However, due to the ongoing expansion projects of ferro-chrome production of Yildirim Group in Turkey and Sweden, the subject of ferro-chrome production in China will be considered from 2010 and afterwards. As far as the market of chrome in China is concerned, a signal to arise various changes has been seen. Chinese ferro-chrome producers have intended to maintain the existing structure to produce ferro-chrome in China through imports of chrome ore from all available sources outside of China. Also, owing a crisis of electric power emerged in South Africa, China has been increasing their imports of low grade chrome ore from South Africa. This aspect of chrome ore to be imported into China is ascertaining a direction, which China increasingly produces charge chrome with a majority of their total output. In consequence of that, China increases their imports of chrome ore especially from South Africa and South African charge chrome producers have to compete with Chinese ferro-chrome producers on sales of charge chrome in China. Therefore, South African ferro-chrome and chrome ore producers confront each other in the Chinese market. (7) As mentioned above, by utilizing its advantage of high quality chrome ore, Yildirim Group (Eti Krom and VAAB) concentrates on production and sales of VULP (Very Ultra Low Phosphorus) high carbon ferro-chrome with low Si, low Ti and low Mn and aims to sell these special grades of high carbon ferro-chrome to the niche markets in high quality special steel, foundries and stainless steel segments. |
| last modified : Tue 05 Aug, 2008 [10:52] |
