This strategic consideration arises from sustained challenges in the global ferrochrome market, which have significantly impacted the venture's profitability.
 

Merafe reported a 27% decrease in earnings before interest, taxation, depreciation, and amortization (EBITDA) for the half-year period ending June 30, 2024, amounting to R1.1 billion. Headline earnings per share declined from 42 cents to 28.2 cents during this period. Although interim revenues saw a marginal decrease of 0.4%, totalling R4.74 billion, the company's net asset value experienced a 3% increase, reaching R5.4 billion. Net cash flows from operating activities rose by 7%, amounting to R852 million.
 

Several operational challenges have exacerbated the situation:

• The venture has been burdened by high energy costs, particularly during peak demand periods.
• Port and rail logistical constraints have further strained operations, leading to increased reliance on road transportation and higher associated costs.
• The total unit cost of ferrochrome production rose by 28% in 2023, driven by higher inflation, increased ore market costs, and elevated reductant and plant expenses. Lower production volumes also negatively impacted per-unit plant costs.

Considering these challenges, the Glencore-Merafe Chrome Venture has initiated a comprehensive business review to explore viable solutions for sustaining profitability. If no feasible alternatives are identified, the venture plans to commence suspending certain ferrochrome furnaces starting in May 2025, leading to a substantial reduction in Merafe's ferrochrome production.

To mitigate adverse impacts, the venture is actively engaging with regulatory authorities and organized labour. Discussions with suppliers are also underway to identify cost-saving measures aimed at improving the current situation.
 

These developments underscore the significant challenges facing Merafe Resources and the broader ferrochrome industry in South Africa, as companies navigate economic headwinds and operational constraints.