In a statement accompanying its interim results, board chairman Herbert Nkala said the increase in the cost negatively impacted on the margins.
“The company continued to import chrysotile fibre from Brazil and Russia at a landed cost of US$1 200 per tonne which is almost double the price the local mine used to charge for fibre,” Nkala said.
SMM mines at Shabanie and Mashava used to supply Turnall with the fibre. The two mines have not been operating for over two years due to cash flow problems after government seized the mines from businessman Mutumwa Mawere in 2004.
Nkala said Turnall was keeping three to four months fibre stocks to ensure that its two factories do not experience disruptions. He said notwithstanding the problems incurred in buying expensive fibre, volumes were 36 000 tonnes in the half year ended June 30 growing by 26% over the same period driven by demand for building products.
In the same period, Turnall’s turnover was US$22,2 million up 63,35% from the previous year. The turnover came mostly from domestic sales with exports contributing a mere 1%.
Nkala said the low contribution by exports is attributed to the fact that Turnall “was only able to re-enter the South African market at the end of July 2011 after the successfully commissioning of the machine to manufacture asbestos free product and certification by the South African Bureau of Standards”.
He said exports were expected to contribute a significant part of turnover in the second half of the financial year. Profits from continuing operations were US$2,7 million up 83,6% from the same period last year.
Nkala said Turnall had closed the half year with short borrowings of US$9,6 million used to purchase fibre from Brazil and Russia.
He said the fibre raw material stocks at half year amounted to US$6 million.