JOHANNESBURG (miningweekly.com) – The share price of the JSE-listed Merafe Resources rose more than 6% in just over half an hour on Wednesday morning after the company announced that it was recommissioning several furnaces in response to strengthening global demand for ferrochrome.

The black-economically-empowered Merafe, headed by CEO Steve Phiri which has a chrome venture with the LSE-listed Xstrata, slashed production to 20% of available capacity late last year in response to collapsing ferrochrome demand in the wake of the global financial meltdown.

But Merafe informed shareholders on Wednesday that the Xstrata-Merafe Chrome Venture had lifted production back up to 60% of available capacity, through recommissioning at the venture’s five ferrochrome operations. Anglo American suitor Xstrata, headed by South African Mick Davis, is the world’s largest producer of ferrochrome.

The venture has doggedly avoided retrenching any of its 6 000 workers during the 80%-of-capacity shut, avoiding cash burn by selling material off stockpiles and retaining production out of its most efficient Lion furnaces, which make use of low-cost Premus technology.

Lion’s two furnaces have a capacity of 360 000 t/y, which is virtually on a par with five Rustenburg furnaces with more ore less the same capacity.

“We were always going to try by all means to save the jobs and it’s a big relief for us to be able to do so. It’s the number-one priority, on a par with making a return for shareholders. We regard our employees as shareholders, too,” Phiri told Mining Weekly Online.

“We still hold the view that the price has bottomed and there are a number of circumstances that support that view,” Phiri added.

The European contract price of charge ferrochrome, a key component of stainless steel, surged 29% from US69c/lb to US89c/lb in the second last week of June, which, at the time, lifted the share prices of Xtsrata, Merafe, International Ferro Metals and ENRC of Kazakhstan.

Cadiz mining analyst Peter Major also said that global ferrochrome production had been turned off faster than any other commodity, which augured well for an earlier revival.

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