Merafe shares up on Glencore buying Bafokeng stake
JOHANNESBURG (miningweekly.com) – The shares of the black-run Merafe Resources rose sharply following the announcement that Royal Bafokeng Holdings had sold its entire shareholding to Glencore, with which Merafe has the Glencore-Merafe Chrome Venture in Limpopo province.
The share price rose by 7.7% to 83c a share in early morning trade.
The JSE-listed ferrochrome company, headed by CEO Zanele Matlala, said that the transaction was not expected to have an impact on the operations or mineral rights relating to the Glencore-Merafe Chrome Venture.
Royal Bafokeng, a company of the 300 000-strong Bafokeng community, sold its entire 28.68% interest in Merafe to Glencore (Nederland) B.V., resulting in Brian Harvey resigning from the Merafe board.
Last week Merafe reported that its chrome venture with Glencore had lifted production by 15% in the three months to March 31, which saw its share price rise by 1.32% to 77c a share in early morning trade.
This increase of Merafe’s attributable ferrochrome production from the Glencore-Merafe Chrome Venture was mainly due to additional production from the Project Lion II furnaces, which are producing at above 80% of operating capacity and where the ramp-up continues to be on track.
Demand for ferrochrome is expected to grow by 8% this year and 5% next year.
The Glencore-Merafe Chrome Venture owns and operates several chromite mines and 22 ferrochrome furnaces with a combined installed capacity of 2.34-million tons of ferrochrome a year.
After ten years of ongoing investment in a suite of projects, the Glencore-linked Merafe is in harvest mode.
The projects have included the low-energy Lion smelter complex, the Bokamoso and Tswelopele pelletising and sintering plants, upper group two plants and the Wonderkop acquisition.
Merafe – in which the State-owned Industrial Development Corporation remains a major shareholder – last year put its diversification plans on hold for another three to five years. Merafe’s revenue and operating income are generated primarily from the venture, which is one of the global market leaders in ferrochrome production.
The Lion ferrochrome smelter, owned and operated by the Glencore Merafe Chrome Venture, uses 37% less electricity and considerably less coke than conventional ferrochrome processes to produce the equivalent volume of ferrochrome.
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