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Merafe Jumps to 4-Month High on Ferrochrome: Johannesburg Mover

April 11, 2012

Merafe Resources Ltd. (MRF) jumped to the highest in more than four months after saying benchmark ferrochrome prices rose 17 percent for the second quarter of 2012.

Shares in the company advanced 5.6 percent, the most since Sept. 14, to 95 cents at the close in Johannesburg, the highest since Dec. 6. More than 5.5 million shares changed hands, 244 percent of the daily traded average for the past three months.

The European benchmark ferrochrome price was settled at $1.35 per pound for the second quarter of 2012, an increase of 17 percent from the $1.15 per pound price in the first quarter, Merafe said in a statement. The company and Xstrata Plc (XTA) co-own the Xstrata-Merafe Chrome Venture, the largest producer of ferrochrome, used in stainless steel.

“It was much greater than expected,” Lindsay Roots, an analyst at Cape Town-based money manager BoE Private Clients, said by phone.

A closure of furnaces as part of an accord with state power company Eskom Holdings SOC Ltd., in which the utility buys back electricity, will only partially offset the benefits of the price increase, Roots said.

Merafe said on March 30 the chrome joint venture would close another two furnaces until May 31 as part of its agreement with Eskom. The total ferrochrome production loss is estimated at 130,000 metric tons in addition to the 30,000 tons from two other closures, according to the company.

Eskom, which supplies about 95 percent of South Africa’s electricity, is grappling with a mounting maintenance backlog as usage remains too high for it to shut enough capacity for repairs.

To contact the reporters on this story: Stephen Gunnion in Johannesburg at

To contact the editors responsible for this story: Gavin Serkin at

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