Afrimat is counting on the restarting of South Africa’s ferrochrome smelters to restore demand for its products, after the sector’s power woes resulted in investors dumping the group’s stocks this year.
Shares in the company slumped to five-year-lows on Tuesday, extending a more than 17% decline since December as a trading update pointed to a substantial drop in earnings for the six months to end-February.
The group now expects to report a headline loss of 2.8c-10.1c per share for the second half — a far cry from the 101.9c HEPS reported for the first six months of the financial year.
The damage largely stems from a growing number of idle ferrochrome smelters across South Africa, which has dealt a blow to local demand for iron ore and anthracite.
As rising power costs make it increasingly attractive to send raw ore to China than smelt it at home, a number of ferrochrome furnaces have wound down their operations in recent years, with the decline accelerating in 2025.
South Africa’s production of the steelmaking ingredient plunged by 50% last year, according to Glencore joint venture partner Merafe.
Most notable in recent months have been Glencore’s Boshoek, Wonderkop and Lion Smelters, which have threatened to retrench 2,500 workers if Eskom fails to meet their demands.
The result has been a historic power discount, which revived hope in the struggling sector in the past few weeks. The deal, whose approval now lies in the hands of the National Energy Regulator of South Africa (Nersa), will slash Glencore’s power tariff by more than half, saving thousands of jobs and hopefully triggering a reboot of ferrochrome operations across the country.
In its Tuesday update, Afrimat said that the restarting of certain ferrochrome smelters had already led to the commencement of anthracite supplies from its Nkomati mine, but that this would not have any effect on its upcoming annual results, scheduled for May 20.
Still, the message restores some faith in the asset and its outlook in the coming years. Last year, Afrimat warned that it was reconsidering the viability of its Nkomati mine, having put its underground mining operations on hold earlier in 2025.
In the iron ore division, however, ArcelorMittal SA’s (Amsa’s) ongoing negotiations over a buy-out continue to cast uncertainty over Afrimat’s sales outlook.
In its last results, the group warned that Amsa’s closure of its Newcastle long steel business might significantly hurt sales in the period under review.
“Nkomati is a 2027 story, and when you look at the share price in context, the last time Afrimat traded at these levels, HEPS were 441.7c per share,” said MP9 Asset Management chief investment officer Aheesh Singh.
“Today, the full-year HEPS guidance is sub-R1.00. The market isn’t wrong to be cautious — near-term earnings are still murky.”
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