Merafe may idle up to two-thirds of ferrochrome production - Miningmx

MERAFE Resources could mothball up to two-thirds of ferrochrome production in terms of a business review which is expected to be completed by May.

Zanele Matlala, CEO of Merafe said between six to eight of its remaining 12 operating furnaces are at risk. Ten furnaces at its Rustenburg and Lydenburg ferrochrome complexes have already been idled, she said.

A near 700% increase in electricity prices over the last seven to eight years was the main cause of the reduction in Merafe’s ferrochrome production.

The Glencore-Merafe Joint Venture, in which Merafe has a 20.15% stake, produced about 1.5 million tons of ferrochrome during the 2024 financial year (301,000 tons attributable to Merafe). This compares to installed capacity of 2.3Mt/y.

In the event of further cuts, the Glencore-Merafe JV would effectively become a chrome ore producer landing a major blow to South Africa’s beneficiation ambitions.

Japie Fullard, head of Glencore’s ferroalloys division, said the JV would produce twice as much chrome ore as ferrochrome were it not to convert. “We think it is in the interests of South Africa that we convert (ore to ferrochrome) wherever possible” but the business was losing cash given current electricity costs.

He said the JV was in discussions with the South African government about procuring “other interventions” as well as an already agreed negotiated price agreement (NPA) which gives the business some electricity cost relief. He did not give further details.

Were Merafe to convert to near total chrome ore production, it would place additional pressure on South Africa’s rail capacity but he added that the export volumes could still be managed “by various channels”, said Fullard.

“There are no decisions yet on which furnaces could be closed,” said Matlala when asked if furnace closures could extend to the JV’s state-of-the-air Lion Complex. “We are looking at six to eight furnaces that could be idled,” said Matlala. “We have already got ten on care and maintenance.”