KEY POINTS
- Merafe restarts Boshoek and Wonderkop smelters.
- Nine-month ferrochrome output falls 46%.
- China supply threatens profit margins.
Merafe Resources has restarted operations at two ferrochrome smelters in South Africa following new electricity pricing agreements with state-owned power utility Eskom, raising hopes of a recovery in production after more than a year of shutdowns.
The Boshoek and Wonderkop smelters, jointly owned by Glencore and Merafe, resumed operations in September and October 2026, respectively. The agreements reached with Eskom in June are expected to improve the facilities’ operating viability by reducing electricity costs.
Production Recovery Expected
The Glencore-Merafe Chrome Venture has the capacity to produce 2.3 million tonnes of ferrochrome annually when operating at full capacity. This represents about one-third of South Africa’s total annual ferrochrome export capacity.
Production at the two facilities had been suspended because high electricity costs made operations financially unsustainable. Boshoek was shut down from May 1, 2025, while Wonderkop stopped production from May 31 of the same year.
Merafe said production ramp-up would continue throughout the fourth quarter of 2026 as the smelters gradually return to operation.
Merafe owns a 20.15% interest in the joint venture, while Glencore holds a 79.5% participation stake through its South African subsidiary, Glencore Operations South Africa.
Ferrochrome Output Falls 46%
Despite the restart, Merafe’s attributable ferrochrome production from the venture fell to 61,000 tonnes in the nine months to September 2026, representing a 46% decline from the corresponding period last year.
The company attributed the drop mainly to the suspension of operations at Boshoek and Wonderkop.
Attributable chrome ore production also declined by approximately 7% to 658,000 tonnes. Merafe linked the reduction to lower run-of-mine output and reduced feed from its concentrators.
Production of platinum group metals concentrate dropped by 8% to 10,200 ounces, largely because of lower primary mine output and changes in the feed mix.
Higher Earnings Despite Production Challenges
Merafe reported a profit of R512 million for the six months ended June 2026, more than double the R233 million recorded in the corresponding period last year.
The improvement was driven by significantly higher chrome ore sales volumes and stronger commodity prices, despite challenging market conditions and lower ferrochrome production.
The company said its earnings performance demonstrated the resilience of its business model and its strategy of maximising value from chrome operations.
China Supply Could Pressure Margins
Merafe CEO Zanele Matlala said the outlook for the remainder of 2026 was cautiously optimistic, with lower electricity tariffs and improved power supply from Eskom expected to reduce operational risks and support higher smelter output.
However, she warned that profitability could remain under pressure because of rising ferrochrome supply from China and the possibility of market oversupply.
Although chrome ore prices had stabilised, the company’s performance would depend on how smelter production levels and ferrochrome prices develop during the second half of the year.
On the Johannesburg Stock Exchange, Merafe shares rose 1.49% to R1.36 in Tuesday afternoon trading, while Glencore shares declined 1.88% to R113.53.
