THERE were once three listed ferrochrome companies on the Johannesburg Stock Exchange. These days, pure play exposure to the stainless steel ingredient is somewhat harder to come by, but there is access through Merafe Resources, which owns 20.5% of the Glencore-Merafe Chrome Joint Venture. Glencore operates the Western limb (North West province) and Eastern Limb (Mpumalanga and Limpopo provinces) facilities producing some 1.8 million tonnes of chrome of which Merafe’s share was 377,000 tonnes in its last full financial year. Although a company without razzle and dazzle, it befalls CEO, Zanele Matlala, to keep whittling away at its debt – it fell to R479.5m at mid-2016 with an optimal debt target of R300m in its sights – while maintaining a shareholder payout. In an era of poor investor returns, and topsy-turvey empowerment, there’s not much wrong with the things Merafe is doing. A time may come, however, when investors start posing the Quo Vadis question of Merafe. Matlala once theorised diversifying the company once it had completed its share of the capital programme on the Lion II assets, a strategy that was quietly shelved. Might that be resuscitated given that ferrochrome, owing to its exposure to China’s stainless steel market, is a highly cyclical and volatile mineral? Perhaps that will materialise should Eskom power become abundant again which could provide the company with downstreaming opportunities. Until then.
LIFE OF ZANELE
A chartered accountant by profession, Zanele served in the senior ranks at the South Africa’s Industrial Development Corporation and the Development Bank of South Africa before joining Merafe as an independent non-executive. She was appointed CFO of Merafe in 2010 and CEO in 2012 when her mentor and predecessor, Steve Phiri, left to head up Royal Bafokeng Platinum.
“We remain well positioned to take advantage of renewed positive demand.”
- Web Address: www.meraferesources.co.za