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OMH has given the go ahead for a new Ferro Silicon and Ferro Manganese Smelter in Sarawak, Malaysia capable of producing 600,000 tonnes a year. The new facility will provide increased competition against Chinese Ferro Manganese, Silicon Manganese and Ferro Silicon suppliers faced with increasing costs and is an interesting development in the region's Ferro alloys sector.
The cost of the project is estimated at $502 million and is built on cheap hydroelectric power with zero carbon taxes, estimated at approximately 4 cents per kWh, so vital for the energy intensive power process of Ferro alloy production. The production facilities include 24 25.5 MVA fully submerged and semi enclosed furnaces, a 5 MVA refining furnace and a 300,000 tonne per year Manganese sintering plant.
Financing for the project will be jointly funded by offtake agreements and direct investment with leading Ferro alloy suppliers and end users, and a memorandum of understanding has already been agreed with JFE Shoji Trade, part of the JFE Group which includes JFE Steel for 100,000 tonnes a year of Ferro Silicon supply.
The project will produce 310,000 tonnes of Ferro Silicon and 290,000 tonnes of Manganese alloy made up of 190,000 tonnes of Silico Manganese, 60,000 tonnes of High Carbon Ferro Manganese and 40,000 tonnes of Medium Carbon Ferro Manganese. The facility will rely on importing 640,000 tonnes of Manganese Ore from OMH's Bootu Creek mine in Australia and Tshipi ore from South Africa, and 570,000 tonnes of silica quartz from China.
Initial production is expected by the first quarter 2014 and ramp up to full capacity by end of 1st half of 2015. OMH sees huge potential in the project to be very competitive against increasingly expensive Chinese Ferro Alloy production, which has experienced power and environmental curbs, higher labour costs, and most importantly a move from generous export incentives to export taxes of 25% on Ferro Silicon.
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