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Ferrochrome producer Merafe declares dividend on record profit

JOHANNESBURG ( – Last year was a year of recovery for Glencore Merafe Pooling and Sharing Venture, both financially and operationally.

JSE-listed Merafe, led by CEO Zanele Matlalareported on Tuesday that improving economic activity contributed to robust demand for ferrochrome, which, coupled with supply constraints, led to a marked increase in prices.

Higher volumes sold drove up revenues, which were however dampened by the stronger rand/dollar exchange rate.

Merafe posted its highest after-tax profit since the company was founded in 2004, leading to the declaration of a final cash dividend of R549.8 million, bringing the total dividend for the year to R724.7 million.

Ferrochrome production increased by 43% to 379,000t and revenue increased by 69% to R8,063 million, pushing profits up to R2,432 million from R168 million in 2020 .

Net cash provided by operating activities increased to R1,156m, net free cash increased to R972m from R278m in 2020, and a cash dividend of 22c per share was declared compared to zero in 2020.

Matlala said in a statement to Weekly mining that strong growth in stainless steel production as well as developments in China have been key to driving the ferrochrome market in 2021.

“The efficiencies achieved in our operations have not only met this demand, but also ensured our ability to operate at these levels in a sustainable manner,” Matlala said.

Merafe’s investment program, described as necessary to enable the best performance, was resumed in 2021 and will continue in 2022.

“Global growth, while still positive, is expected to slow from the highs recorded in 2021,” Matlala said.

While the effects of Covid had been less damaging in recent times, the pandemic remained a threat that the company would continue to monitor.

“We therefore remain cautious in our approach going forward and will continue to focus on operational efficiency, cash preservation, cost control and efficient capital allocation,” Matlala added.

The platinum group metals plant and green energy initiatives were among the significant projects that would receive management attention in 2022.