FERROCHROME producer Merafe Resources closed stronger on the JSE yesterday as it returned to profitability and rewarded shareholders with an interim dividend on healthy growth in demand during the half-year ended June 2021.
Merafe, whose primary source of income is the Glencore-Merafe joint venture, has soared by 104 percent on the JSE in the year to date after bouncing back from the Covid-19 pandemic.
The shares closed at R0.93 on the JSE yesterday.
The company swung to a profit after tax of R576 million at the end of June, compared to a loss of R961m a year earlier as an upswing in ferrochrome demand contributed to increased volumes sold.
Merafe said the higher CIF (cost, insurance and freight) prices realised were to some extent offset by a stronger average rand dollar exchange rate, which also boosted its balance sheet.
Chief executive Zanele Matlala said strong growth in stainless steel demand was a positive development and had been key to buoyancy in the ferrochrome market.
“Our operations are ready to respond to this demand should it be sustained for the rest of the year. We, however, remain cautious in our approach to the year and will continue to focus on efficient operations, cash preservation, cost control and efficient capital allocation,” Matlala said.
Matlala said despite the Lydenburg smelter being on care and maintenance, production volumes increased significantly due to current production being less affected by the Covid-19 restrictions coupled with improved plant efficiencies achieved at its smelters.
Merafe’s attributable production increased by 66 percent to 199 000 tons from 120 000 tons a year earlier.
The group said the government’s plan to impose a tax on chrome exports would boost its business case. Glencore ferro-alloys head, Japie Fullard, said the ore tax was approved in principle and the government should implement it.
BUSINESS REPORT