JOHANNESBURG (miningweekly.com) – Johannesburg Stock Exchange-listed Merafe has reported a profit of R720-million for the six months ended June 30, on higher realised chrome ore prices and a weaker rand:dollar exchange rate.

But downward pressure on chrome ore prices has started and is expected to translate to lower ferrochrome prices, Merafe CEO Zanele Matlala outlined in the half-year presentation covered by Mining Weekly.  (Also watch attached Creamer Media video.)

Ferrochrome prices remain strained and cost increases continue to put pressure on margins and the company is expecting the second half of 2024 to be softer given a weaker market outlook.

Nevertheless, the board of Merafe has declared an interim gross cash dividend of 20c, on a par with that for the corresponding period of last year.

Merafe’s revenue and operating income are primarily generated from the Glencore-Merafe Chrome Venture, which is one of the global market leaders in ferrochrome production, with a total installed capacity of 2.3-million tonnes of ferrochrome a year.

Merafe shares 20.5% of the earnings before interest, taxation, depreciation and amortisation from the venture, its reportable segment being the mining and beneficiation of chrome ore into ferrochrome and the extraction of associated minerals.

Operationally, ferrochrome and chrome ore production were lower, with some improvement in electricity supply and logistics.

Global stainless-steel production increased and demand for ferrochrome followed a similar trend, with rand weakness against the dollar providing some cushion,

Global stainless-steel production increased by 9% to 31.3-million tons. The biggest increase came from China, which grew stainless steel production by 12%.

Ferrochrome demand increased by 10% to 7.9-million tons, in line with standard steel production growth.

China continues to dominate global stainless-steel production, accounting for more than 63%. Global ferrochrome production increased by 7% to 16.1-million tons.

Nearly all this growth came from China, which has been introducing new cost-efficient capacity and which grew by about 29%.

South African production decreased by 21% to 3.1-million tons following the growth in ferrochrome production in China, where chrome imports grew by 27% to 8.5-million tons, with the bulk of the chrome coming from South Africa.

Merafe had cash and cash equivalents of R1 717-million as at June 30.