JOHANNESBURG (miningweekly.com) – The global demand for ferrochrome, which South Africa once provided overwhelmingly to the world to back 200 000 local jobs, was higher in the six months to June 30, the period in which this country’s ferrochrome production fell still further as more smelters were idled.

Ferrochrome is a five-times multiplier of raw chrome ore value but South Africa is increasingly switching to the exportation of much lower valued raw chrome ore, which provides its global ferrochrome competitors with increasingly greater opportunity to benefit from the fivefold value-add that it is pivoting away from.

In percentage terms, South African ferrochrome production fell 27% mainly as a result of smelter suspension at a time when South Africa’s power supply remains stable with minimal load curtailments amid smelters also benefiting from a negotiated price agreement, a flat rate, from Eskom, which means there is no need to continue to pursue the former uncompetitive practice of winter shutdown.

Although ferrochrome prices recovered by some 10% from the lows of the first quarter of 2025, this recovery was this week described as still being insufficient to unsuspend South Africa’s suspended smelters.

Ferrochrome is the key ingredient of stainless steel and juxtaposed against South Africa’s decline in ferrochrome production is a global stainless steel production increase of 4% accompanied by a 5% global increase in ferrochrome demand.

“Global stainless steel production increased, and so did ferrochrome demand,” Zanele Matlala, the CEO of the Johannesburg Stock Exchange-listed Merafe Resources, reported during the company’s interim results presentation covered by Mining Weekly.

“However, South African ferrochrome production decreased significantly in response to adverse market conditions, especially ferrochrome prices being below cost of production,” Matlala added. (Also watch attached Creamer Media video.)

Even globally, ferrochrome demand growth was not matched by production, with the 8%-lower global ferrochrome production largely the result of South African producers reducing production.

In contrast, South Africa’s chrome ore exports are set to rise going forward. “Given the structural change of the business, chrome ore production volume and costs will be included in future updates,” Matlala stated during the interim results presentation, when she reported that, encouragingly, the production costs per tonne of ferrochrome decreased by 5% from December 2024 owing to lower chrome ore prices and lower reductant costs. At the same time, chrome ore costs increased by 7% from December 2024 as a result of higher labour, engineering and utility costs.

To bring beneficiated raw chrome ore back into contention, the Merafe CEO reported that engagement with stakeholders was continuing.

“Government has indicated support for the industry. However, no implementation dates are in place yet for the proposed measures.

“The interventions proposed by government include electricity tariffs alignment, chrome ore to be included under export control, chrome ore export tax and expansion of special economic zones, none of which are quick fixes,” said Matlala, who added that the workforce of the Glencore-Merafe Chrome Venture's idled Boshoek and Wonderkop smelters remained in place.

“With the suspension of the smelters, greater focus will be placed on the mining chrome operations, and our reporting is being revised to reflect that,” Matlala informed.

Merafe FD Ditabe Chocho reported that despite the significant reduction in volumes sold in the half year, ferrochrome still accounted for a sizeable 51% of total revenue but half-year ferrochrome revenue was 60% down and chrome ore revenue 17% lower. 

Also, the foreign exchange effects of a stronger closing rand:dollar exchange rate led to a 9% reduction in earnings before interest, taxes, depreciation and amortisation (Ebitda). Owing to suspended operations, standing charges used up 7% of Ebitda. Overall, the 2025 Ebitda from the Glencore-Merafe Chrome Venture was 57% lower than the 2024 comparative figure, Chocho reported.