JOHANNESBURG - Merafe Resources, which operates a chrome joint venture with global trader-miner giant Glencore, jumped 14percent yesterday to R0.32 a share on news of a 13percent bounce in European benchmark chrome prices.
The company informed shareholders that the European benchmark ferrochrome prices had jumped 13cents to $1.14 (R21.58) a pound (lb) in the second quarter of 2020. The first quarter benchmark settled at $1.01/lb.
Merafe chief financial officer Ditabe Chocho said a higher benchmark price environment would help cushion the blow of the coronavirus pandemic outbreak.
Earlier this month, South African ferrochrome producers, including the Glencore-Merafe Resources joint venture, declared force majeure on most contracts following the national 21-day lockdown on March 26.
Merafe said earlier this month that its operations were not considered essential services and have been completely shut down over the lockdown, with no production over the lockdown period.
The settlement of the European benchmark ferrochrome price for the second quarter of 2020 was delayed due to the coronavirus pandemic causing a lockdown in South Africa, a key exporter of the steelmaking ingredient.
South Africa is the world’s largest chrome producer and exporter, producing 3.6million tons of ferrochrome in 2019, according to Merafe.
In February the Merafe-Glencore joint venture informed the market of its plan to potentially close its Rustenburg smelter, placing more than 665 jobs at risk due to the weak economy and high power costs.
The joint venture announced it had started the consultative process with employee representatives and recognised trade unions to discuss the options to secure the sustainability of the operation.
The group also confirmed that it had issued a formal notice for the retrenchments.
“The Section 189 process has not been finalised yet,” Chocho said.
The Rustenburg ferrochrome plant employs 665 employees, including 619 permanent employees, and 46 fixed-term employees.