File picture: Reuters.

Johannesburg - Merafe Resources rose to its highest in more than three years in Johannesburg after saying interim earnings will more than double on ferrochrome output.

Merafe, owner of 20.5 percent of the world’s largest ferrochrome operation in a venture with Glencore, gained as much as 6.5 percent to the highest since May 2011.

It traded up 5.8 percent at 1.46 rand by 11:28 am in Johannesburg.

Merafe sees earnings excluding one-time items of 8.6 cents to 9.2 cents, up from 3.8 cents a year before, the Johannesburg-based company said today in a statement.

Sales of the stainless steel-making ingredient rose 25 percent.

“This increase was primarily attributable to a stronger market” and buyback agreements with Eskom in 2013 that didn’t recur this year, Merafe said in the statement.

South Africa was the largest producer of chrome ore in 2011, according to the US Geological Survey.

Ferrochrome is produced mostly in a higher carbon format and used largely as a feedstock for stainless steel.

Producers in the country, like Merafe and International Ferro Metals, agreed to cuts in output in 2012 and 2013 because of power shortages.

The venture’s Lion II project, adding 360,000 metric tons to an existing 1.98 million-ton capacity, started up in April and has ramped up to 60 percent of design capacity, Merafe said.

Full capacity is expect within the next year, it said. - Bloomberg News