Release Date: March 10, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Merafe Resources Ltd (FRA:RZT, Financial) reported an improvement in safety performance compared to the previous year.
- Ferrochrome and PGM production increased, indicating operational efficiency.
- The company successfully managed rising costs, maintaining control over financial pressures.
- Significant progress was made in renewable energy projects, with financial closure on the Soaner solar project.
- A final dividend of $0.08 per share was declared, reflecting a commitment to shareholder returns.
Negative Points
- Global ferrochrome supply exceeded demand, leading to a surplus and lower prices, impacting revenue.
- The Boshoek smelter was fully impaired, reflecting operational challenges.
- Total revenue decreased by 9% due to lower ferrochrome sales and pricing pressure.
- The stronger rand against the US dollar negatively affected revenue growth.
- The company faces ongoing challenges with high electricity tariffs and competitive pressures from China.
Q & A Highlights
Q: Can you provide assurance on the potential impact of the business review on free cash flow and profitability, considering current prices?
A: Zanele Matlala, CEO: The review is ongoing, but our smelting operations are under pressure and not profitable at current prices. The review aims to identify ways to generate free cash flow, as continuing under current conditions would be challenging. Japie Fullard, CEO of Glencore Alloys, added that the focus is on maximizing shareholder value, whether through ferrochrome production or chrome ore sales.
Q: What is the cost position of Merafe's chrome ore production, and how does it compare to the cost curve?
A: Japie Fullard, CEO of Glencore Alloys: Our chrome ore production is in the second to third quartile of the cost curve, while ferrochrome production is in the fourth quartile. This positioning influences our decision to potentially suspend ferrochrome production in favor of chrome ore sales.
Q: How long can Merafe sustain its current chrome ore production levels, and what is the life of mine?
A: Japie Fullard, CEO of Glencore Alloys: We have a robust reserve and resource base, with more than 30 years of chrome ore available. The focus is on ensuring our ferrochrome complexes remain competitive over the long term.
Q: What are the expected outcomes of the partnership with Smelt Direct, and how will it impact operations?
A: Japie Fullard, CEO of Glencore Alloys: The partnership aims to explore the potential of Smelt Direct's technology, which could significantly reduce electricity usage and costs. The pilot results are promising, and we hope to upscale to commercial operations in the medium to long term.
Q: How does the recent deal with Sibanye Stillwater affect Merafe's carbon targets and safety metrics?
A: Japie Fullard, CEO of Glencore Alloys: The deal primarily impacts scope three emissions and will be managed according to our safety standards. The Chrome Management Agreement ensures that operations are conducted safely and efficiently, aligning with our decarbonization goals.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
