JOHANNESBURG (miningweekly.com) − Shares in JSE-listed Merafe Resources fell as much as 7.9% on Wednesday after the company said that its interim earnings would fall and that its chrome venture with Xstrata would operate at 50% of its capacity until August.

Capacity is down from its previous guidance of 65% during the winter months of June to August when Merafe undertakes routine maintenance. Merafe indicated that the revised production plans were “due to current market conditions”.

Last week, Merafe said that the European benchmark for ferrochrome had been set at $1.20/lb for the third quarter, which is a decrease of 11% from the previous quarter’s $1.35/lb and 4% lower than the first-quarter price of $1.25/lb. The lower prices were mainly attributed to falling demand from stainless steel makers.

Meanwhile, Merafe said that it expected to report much lower earnings when it publishes its six-month financial results on August 2.

Earnings a share and headline earnings a share would be between 3c and 4c, compared with earnings of 8c a share and headline earnings of 7c a share in the prior comparative period.

Shares in Johannesburg-based Merafe fell as low as R1.05 a share after it issued the trading update, but traded at R1.10 a share by late morning.

The Merafe-Xstrata joint venture has a capacity of 1.98-million tons of ferrochrome a year, supplying around 16% of the world's ferrochrome requirements.
 

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