Annual Report 2010 - Outokumpu

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chromium ore was found to extend to a depth of 2–3 kilometres and possibly to four kilometres, while the chromitite layer
possibly extends to a depth of 2–2.5 kilometres or more.
Proven ore reserves at the Kemi Mine total approximately 37 million tonnes while the quantity of mineral resources totals
some 87 million tonnes (estimated to a depth of one kilometre). Information in the new seismic research report indicates
the existence of resources sufficient to allow several hundreds of years of mining activity even with doubled annual
production volumes (the previous estimate was 70–80 years of mining activity). Outokumpu's mineral resources were not
updated on the basis of these findings.
Investment to double ferrochrome production capacity
In June 2010, Outokumpu decided to restart the project to increase the Group's ferrochrome production capacity in
Finland which had earlier been postponed. Including interest payments, this investment will total EUR 440 million. Annual
ferrochrome production at Tornio will be doubled to 530 000 tonnes, enabling Outokumpu to cover all of the Group's
internal needs and also supply global markets with approximately 200 000 tonnes of ferrochrome on an annual basis.
The expanded production capacity is expected to be operational during the first half of 2013 with capacity being ramped
up in 2015. At current prices and exchange rates and at full capacity, the planned expansion will yield additional annual
operating profits totalling some EUR 150 million.
The ferrochrome market is very attractive because of high growth expectations and rising demand, especially from
China. Demand for ferrochrome is primarily driven by the consumption of stainless steel. As ferrochrome production is a
very energy-intensive process, the long-term price of ferrochrome is driven by problems with the availability of electrical
power in South Africa, which supplies approximately 40% of the global market. Related constraints are expected to
continue for several years, and electricity prices in South Africa are forecast to double over the next few years compared
to prices in 2009.
Kemi mine and Tornio ferrochrome smelter
Production 2010 2009 2008
Ore excavated, million tonnes 1.3 0.5 1.3
Chromite concentrates, 1 000 tonnes 598 247 614
Ferrochrome 238 123 234
Ore reserves and mineral resources
31 Dec 2010 million tonnes grade
Ore reserves
Proven 36 26% Cr 2 O 3
Mineral resources
Indicated 13 30% Cr 2 O 3
Inferred 74 29% Cr 2 O 3
A mineral resource is a concentration or occurrence of material of intrinsic economic interest in or on the Earth's crust in
such form, quality and quantity that there are reasonable prospects for eventual economic extraction. An ore reserve is
the economically mineable part of the measured and/or indicated mineral resource. Ore reserves are not included in the
mineral resources.
Outokumpu Annual Report 2010 – Business – Tornio Works