JOHANNESBURG (miningweekly.com) – Ferrochrome company Merafe on Tuesday reported an after-tax profit of R576-million in the six months to June 30 compared with a loss of R961-million in the prior comparative period.

Half-year ferrochrome production rose 66% to 199 000 t, revenue rose 60% to R3 746-million and earnings before interest, tax, depreciation and amortisation  (Ebitda) rocketed 422% to R819-million.

Net cashflow from operating activities rose 287% to R635-million, cash increased 187% to R797-million and an interim dividend of 7c a share has been declared.

An upswing in ferrochrome demand contributed to increased volumes sold and higher prices realised, which were to some extent offset by a stronger average rand:dollar exchange rate.

The strong growth in stainless steel demand is a positive development and has been key to the buoyancy in the ferrochrome market, the JSE-listed company stated in a release to Mining Weekly.

Despite the Lydenburg smelter being on care and maintenance, production volumes increased significantly owing to current production being less affected by the Covid-19 restrictions coupled with improved plant efficiencies achieved at its smelters.

Global economic growth has been rapid to date. The sustainability of this growth depends on several factors including the success of the Covid-19 vaccine rollout programmes.

While in several parts of the world, the Covid vaccination drive is starting to pay off and normality is gradually being restored, there are several parts of the world, including South Africa, where the pandemic is still wreaking havoc on communities and businesses, the company stated in the release.

Merafe stated that it would continue to focus on efficient operations, cash preservation, cost control and efficient capital allocation.

Merafe's revenue and operating income are primarily generated from the Glencore-Merafe Chrome Venture, which has a total installed capacity of 2.3-million tonnes of ferrochrome a year. Merafe shares in 20.5% of the Ebitda.