Merafe more than doubles earnings while its ferrochrome furnaces stand idle

Merafe Resources made more money selling chrome ore than the finished product in the first half of 2026.

Basic earnings per share rocketed 120% to 20.5 cents while headline earnings per share (Heps) increased 64% to 20.7 cents. The share price is up nearly 10% over the last month, and 23% up for the year to date.

Profit increased to R512 million from R233 million, allowing the company to quadruple its interim dividend to 16 cents a share.

Ferrochrome production was down 75% over the period, illustrating how South Africa has become an exporter of raw chrome ore rather than the higher-value metal produced from it.

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Smelting operations were suspended at the Wonderkop and Boshoek smelters because of high electricity costs. The Lion smelter resumed production only towards the end of February.

That picture should change going forward after Eskom and the Glencore-Merafe Chrome Venture concluded a negotiated electricity pricing agreement at 62 cents per kilowatt hour.

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This is 54% below the R1.36/kWh the smelters were paying at the end of 2025 and substantially below the interim tariff of roughly 88c/kWh introduced in January.

The 62c tariff will apply to the Glencore-Merafe venture for three years and has enabled preparations to restart the Boshoek and Wonderkop smelters.

Merafe owns 20.5% of the venture, with Glencore holding the balance. Merafe says the agreement provides greater operational flexibility and a more stable electricity pricing framework.

Read:
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Lower tariff could lift results

The benefits of the lower tariff are yet to reflect meaningfully in Merafe’s financial results as the agreement with Eskom was concluded only at the end of the reporting period. These should start to reflect in the final year results as the furnaces restart.

Following the agreement with Eskom over the lower electricity tariff, the company withdrew its announced plans to start laying off workers.

The story of the first half of the year to June 2026 is one of surging Chinese demand for chrome ore to keep its own ferrochrome smelters producing.

Chinese ferrochrome production increased 32% in the first half of 2026, well ahead of the 10% increase in global production. China accounted for 86% of global imports of South African chrome ore, according to Merafe.

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South Africa therefore supplies the raw material while China captures more of the value from converting it into ferrochrome, which is primarily used in stainless-steel production.

Read:
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For Merafe, ferrochrome unit production costs increased 61% during the six months, partly because standing charges and other fixed costs were spread across sharply reduced production. Merafe absorbed R266 million in attributable standing charges while the plants were largely idle.

Revenue from PGM (platinum group metals) concentrate increased 63% to R255 million, driven by a 96% increase in the basket price for PGMs.

Operating and other expenses increased by 35% to R2.6 billion due largely to higher chrome ore sales volumes.

The second half of the year looks promising from a production standpoint as the idle smelters are fired up again, though margins may remain under pressure due to increased ferrochrome production in China and potential market oversupply.

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