Merafe reports improved production


Merafe reports improved production


Published Date: 2021-04-16 | Source: Stephen Gunnion | Author: Stephen Gunnion

Merafe reports improved production

The company, which shares in a joint venture with Glencore, attributes the rise in output to production efficiencies.

Merafe Resources has reported a small improvement in ferrochrome production for the first quarter of its new financial year.

In a production report, the company said attributable ferrochrome production for the three months to end-March rose 3% to 103,000 tonnes from the same period last year. In the December quarter, production declined to 97,000 tonnes. The increase was achieved as a result of production efficiencies at its smelters and in spite of its Lydenburg smelter and Rustenburg furnace 5 being on care and maintenance.

Merafe's main source of revenue and earnings is its stake in the Glencore Merafe Chrome Venture, which is one of the global market leaders in ferrochrome production. Merafe shares in 20.5% of the earnings before interest, taxation, depreciation and amortisation (EBITDA) from the venture.

It reported a big decline in annual output for 2020 as it cut back on production due to Covid-19, weak market conditions and electricity constraints. The joint venture was forced to close operations under the initial stages of the national lockdown. It was also impacted by ongoing cost pressure including unsustainably high electricity pricing.

Global ferrochrome consumption declined last year due to weaker demand for stainless steel, while chrome ore exports also came under pressure. Apart from lower volumes of commodities sold, the slowdown in global economic activity resulted in lower prices for ferrochrome and chrome ore. Output for the year declined 29% to 265,00 ounces.

Merafe's shares fell 6.6% to 71c yesterday. The production report was released after the close of trade.


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