* To build 360,000-tonne capacity smelter in South Africa
* New technology is energy efficient, to cut costs
* JV partner Merafe Resources has right to participate
(Adds details, quotes, Merafe statement)
LONDON, Oct 20 (Reuters) - Miner Xstrata will spend $710 million to boost capacity of ferrochrome production and cut costs with a more energy-efficient smelter in South Africa, which is struggling to meet power needs.
Xstrata, one of the world's biggest producers of ferrochrome, a key component in stainless steel, said in a statement on Wednesday it had approved the second phase of its Lion ferrochrome complex.
"The use of our energy-efficient Premus technology for the expansion project will expand Xstrata's cost leadership in a global environment of escalating energy costs," Xstrata Alloys Chief Executive Peet Nienaber said.
Under the expansion project, a new smelter will be built with a capacity of 360,000 tonnes per year, boosting the group's overall ferrochrome capacity to over 2.3 million tonnes.
The project is due to reduce overall costs of ferrochrome production by around 6 percent, Xstrata said.
Xstrata's joint venture partner, Merafe Resources Ltd, has the right to participate in the expansion at a 20.5 percent level.
"Merafe will be assessing Lion II and an announcement regarding the company's participation in the project will be made by the end of the year," it said in a separate statement. (Reporting by Eric Onstad; Editing by Michael Shields)