Johannesburg - South African ferrochrome producer Merafe
Resources [JSE:MRF] reported a 70% rise in first-half profit on Tuesday despite a
sharp drop in production following the company’s decision to shut some furnaces
to cut power demand.
The country’s largest ferrochrome producer reported
first-half diluted headline earnings per share of 5.5 cents, in the middle
range of its guidance to the market, compared to 3.4 cents in the same period
Production of the ferrochrome metal used in steel-making f
ell 21% i n the six months to the end of June.
Merafe, which operates a joint venture with London-listed
Xstrata, struck a deal with state-owned utility Eskom to shut seven of its
furnaces until the end of May and allow the power producer to buy back the
electricity the plants would have consumed.
The compensation provided by Eskom was adequate to cover for
lost profits from the suspended output, the company has said.
South Africa has been struggling to meet demand for power in
Africa’s biggest economy.
Merafe also said its flagship Lion II project to lift
production at its Lion ferrochrome plant remained on budget and on track to be
completed in the second half of 2013.
Shares in the company are down nearly 12% so far this year,
compared with a 10.19% rise in Johannesburg’s All Share [JSE:J203] index.