Merafe Resources, through its chrome pooling and sharing venture with Glencore Operations SA, has initiated a business review process of its ferrochrome smelting business and is assessing potential measures to address market challenges.
The review follows sustained pressure from the prolonged economic downturn in the global ferrochrome market, and these pressures are not expected to ease in the near- to medium-term, Merafe said in a statement on Monday.
Should the pooling and sharing venture not be able to identify viable solutions to sustain profitability, it will begin suspending some of its ferrochrome furnaces in May, thereby resulting in a significant reduction in Merafe’s ferrochrome production.
“The PSV is actively working with regulatory authorities to mitigate any continued adverse impacts and will continue to explore all viable alternatives in partnership with organised labour,” it said.
The PSV has also engaged with its suppliers to identify cost-saving measures to help improve the current situation.
In October, Business Day reported that Merafe’s attributable ferrochrome production from the Glencore Merafe Chrome Venture in the third quarter was 76,000 tonnes, taking output for the first nine months to 230,000 tonnes, an increase of 2% from the previous year.
Merafe, which is the junior empowerment partner in the chrome joint venture with Glencore, said the increase was primarily due to all operating smelters being in production throughout the winter months.
Ferrochrome is an alloy of chrome and iron used in the production of stainless steel, special steel and castings. The largest producers are SA, Kazakhstan, India and China.
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