Merafe, Glencore reopen three smelters in September but 9-month output down a third

Chrome concentrate

MERAFE Resources, a Johannesburg-listed ferrochrome producer, said it had reopened three of its smelters during September after a combination of restructuring and the impact of Covid-19 pandemic saw production scaled back in the first half of the year.

Commenting in a nine-month production update, the company also said attributable ferrochrome production from its Glencore Merafe Chrome Venture totalled 48,000 tons in the third quarter, resulting in an overall 37% decrease in production this year.

The decrease was owing to production cutbacks in response to “… Covid-19, market conditions and electricity curtailments to a limited extent”, the company said.

“All smelters, except for Lydenburg which is on care and maintenance, are currently operating, with Boshoek, Wonderkop and Rustenburg having resumed production in September 2020,” it said.

The Glencore-Merafe Chrome Venture (in which Merafe has a 20.5% stake), has gradually reduced production of ferrochrome.

In January, it opened a Section 189 process in terms of the Labour Relations Act in South Africa over its ferrochrome production at Rustenburg which produces 430,000 tons of the 2.3 million tons in installed smelting capacity.

Japie Fullard, head of ferrochrome operations for Glencore in South Africa, said in September a total of 1,000 people would be affected by the Section 189 review (in terms of South Africa’s Labour Relations Act) as well as the closure of Lydenburg which would account for 628 of the 1,000 job losses.

The South African government on Thursday proposed a tax on the exportation of chrome ore, and other measures to do with “… the usage of energy efficiency technologies on smelters, and the adoption of cogeneration and self-generation technologies” aimed at boosting the country’s ailing ferrochrome production.

The proposals have been criticised by The Chrome Group, representing prominent ferrochrome producers including Merafe Resources, and the Minerals Council South Africa which say they ignore the uncompetitive cost of electricity supplied by Eskom.