[miningmx.com] — MERAFE Resources reported a first-half return to profit on Tuesday and forecast a gradual recovery in ferrochrome demand by the end of 2010.
Merafe, the world’s largest ferrochrome producer, which operates a joint venture with London-listed Xstrata, said ferrochrome inventory remained low at 10-12 weeks due to reduced South African capacity.
The miner said headline earnings per share for the six months to end-June totalled 7 cents, in line with its forecast, compared with a loss of 3 cents a year earlier.
Headline earnings are the main gauge of profit in South Africa and strip out certain one-off and non-trading items.
“Continued global economic growth coupled with the lack of any new ferrochrome capacity coming on stream in the immediate future should support a recovery in demand in the final quarter of 2010 and into 2011,” the company said in a statement.
Revenue increased by 45% to R1.19bn rand ($163.8m).
Demand for ferrochrome, used in stainless steel to prevent corrosion, slumped during the economic crisis, forcing companies in top producer South Africa to cut output.
Merafe’s joint venture with Xstrata has since restarted most of its furnaces, after the market began to turn in the third quarter of last year.
Prices for ferrochrome jumped by 35% in the second quarter of this year as demand rebounded.
