Lion ferrochrome smelter.
JOHANNESBURG (miningweekly.com) – Third-quarter attributable ferrochrome production of Merafe Resources from the Glencore Merafe Chrome Venture was 40 000 t, which resulted in a production decrease of 21% for the first nine months of this year compared with the first nine months of 2022.
Merafe reported on Friday that the reason for the reduction was a planned production pullback in response to market conditions. Only the group’s lower-energy Lion smelter operated over the three-month, high electricity demand winter season, a period of elevated power prices.
Attributable ferrochrome production in the nine months of this year was 225 000 t compared with 286 000 t in the first nine months of 2022.
The main focus of the business of the Johannesburg Stock Exchange-listed Merafe is on its 20.5% participation in the earnings before taxes, depreciation and amortisation of the Glencore-Merafe venture, in which Glencore has a 79.5% participation. Merafe and Glencore formed the venture in 2004 when they pooled their chrome operations.
Ferrochrome is a key ingredient in stainless steel, a recyclable corrosion-resistant product, with 90% of the ferrochrome produced used in stainless steel and speciality steels.
As reported by Mining Weekly on October 2, the European benchmark ferrochrome price for the fourth quarter of 2023 is $1.53/lb, 1.32% up on the third quarter of 2023. The third-quarter ferrochrome price of $1.51/lb was 12.2% down on the $1.72/lb of the second quarter.
China continues to dominate stainless steel production, accounting for almost 60% of global stainless steel output, and 65% of global ferrochrome demand. South Africa, which hosts more than 70% of the world's total reserves of chrome, is the largest supplier of chrome to China.
Merafe reported a profit of R1 049-million for the six months ended June 30 on higher realised chrome ore prices and a weaker rand:dollar exchange rate, offset by lower ferrochrome prices and sales volumes, as well as higher costs of ferrochrome production. An interim cash dividend of 20c a share was declared.
The industry provides about 200 000 direct and indirect jobs in South Africa and local power shortage, energy cost and logistics challenges are being mitigated.