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Merafe earnings hurt by steel contraction

Reuters | Thu, 16 Jul 2009 09:24
[miningmx.com] -- SOUTH African ferrochrome producer Merafe Resources said on Thursday it expects to report a first-half headline loss per share of between three and four cents, compared with an earnings per share of 25 cents the previous year.

The net loss for the six months to end-June will be between R80m and R100m ($9.85-12.31 million), it said in a statement.

The global economic downturn saw demand for ferrochrome, used in stainless steel to prevent corrosion, crash, forcing companies in top producer South Africa to cut on output.

The Merafe-Xstrata joint venture had been running only three of its 20 furnaces until last week, with production down to 20% of its capacity, owing to a sharp decline in the metal's price.

But as financial packages to stimulate economic growth feed through and demand for stainless steel begins to pick up, firms like Merafe have begun to refill their stocks and orders.

The company will report interim results on August 4.


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