Ferroglobe aims to restart South African silicon plant, raise U.S. output

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LONDON, April 8 (Reuters) - Silicon producer Ferroglobe (GSM.O) is aiming to restart its South African plant and boost output at its operation in the United States to benefit from strong demand and rising prices, its chief executive told Reuters.

Silicon metal is used to make aluminum alloys used by the auto sector and by the chemical industry to produce chemicals known as silicones.

Ferroglobe, the largest western producer of silicon metal and its alloys and manganese alloys, has a global silicon capacity of about 275,000 tonnes per year, excluding South African production. The silicon market is nearly three million tonnes per year.

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"We are looking at the opportunity to restart the plant in South Africa which has been idled since 2019," Ferroglobe CEO Marco Levi said, adding the final decision on whether to open will be made in the fourth quarter of this year.

The company's South African silicon plant, located in the city of Polokwane, has the capacity to produce 51,000 tonnes a year.

Higher demand for silicon turned around the fortunes of Ferroglobe's operations while anti-dumping duties on cheap imports into the U.S. made the Alabama plant more viable.

Ferroglobe plans to restart the second furnace at its Alabama plant this month, taking production there to 24,000 tonnes of silicon per year.

Ferroglobe has started accumulating cash after a two-year restructuring process that included a management shuffle, cost cuts, boosting margins and abandoning loss-making products, said Levi, who took over as CEO in 2020.

The company has also restarted two furnaces that were closed last year in Spain as energy prices that forced their closure moderated and consumption climbed.

Ferroglobe is in discussions to sign a clean energy contract with a power provider in Spain to cover about 50-70% of its energy needs, Levi said, a trend among European companies. read more

Silicon is also used to make solar panels.

The pivot to renewable energy has underpinned strong fundamentals in the silicon market, even amid uncertainty caused by the Ukraine invasion and recent COVID-19 outbreak in China, which dominates the market, CRU analyst Jorn de Lange said.

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Reporting by Zandi Shabalala; Editing by Pratima Desai, Kirsten Donovan and Chris Reese

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