Merafe declares cash dividend on record profit, elevated chrome

JOHANNESBURG ( – Ferrochrome and chrome company Merafe achieved a…

JOHANNESBURG ( – Ferrochrome and chrome company Merafe achieved a record profit of R1 753-million despite what it describes as a challenging economic environment in the 12 months to December 31.

The board of directors of the Johannesburg Stock Exchange-listed Merafe declared a final cash dividend of R550-million, bringing the total dividends for the 2023 financial year to R1 050-million, well up on the R625-million of 2022.

Net cash generated by operating activities increased by 11% to R1 879-million, helping to take the cash balance to R1 656-million, while earnings before interest, taxes, depreciation and amortisation rose 18% to R2 545-million.

Ferrochrome production decreased by 22% to 300 000 t.

Chrome ore sales volumes were significantly elevated and realised prices increased owing to buoyant chrome demand and supply constraints. However, demand for ferrochrome was weaker compared with prior years, which resulted in lower sales volumes and lower realised prices.

Going forward, a slowdown will likely follow the resilience that characterised 2023, the company predicts, amid the Glencore-Merafe Chrome Venture having laid a foundation that should help the company to withstand looming headwinds.

The negotiated pricing agreement aids with pricing certainty and ongoing work on green energy supports not only the reduction of Merafe’s greenhouse gas emissions but also with some power stability.

Continued operational efficiencies assist with managing costs. Capital expenditure is expected to improve safety and efficiencies and lessen risks from mechanical breakdowns. Two fatalities were suffered by the company in the period, which saw a 3% decrease in the injury frequency rate.

“Our team continues to explore the best ways to mitigate the logistics constraints,” Merafe, headed by CEO Zanele Matlala, stated in a stock exchange news service announcement covered by Mining Weekly.

With continued economic uncertainty in 2024, commodity prices are expected to come under pressure.

Given the unrelenting inflationary pressures, 2024 margins remain at risk of being squeezed.

The anticipated slowdown in 2024 demand is resulting in the company opting to remain focused on efficient operations, cash preservation, cost control, and deft capital allocation.

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