Johannesburg, South Africa — MININGREVIEW.COM — 09 June 2011 – JSE-listed ferrochrome producer Merafe Resources Limited has agreed to join Xstrata plc “’ a major global diversified mining group listed on the London and Swiss stock exchanges “’ in a project to expand the world’s biggest producer of ferrochrome, and will fund its US$149 million contribution with cash, debt and future revenue.
“The companies will construct a 360,00t smelter, raising annual ferrochrome capacity of their joint venture in northern South Africa to 2.3Mt,” Merafe said in a statement here. The company owns 20.5% of the Xstrata-Merafe Chrome Venture, which supplies about a fifth of world demand for ferrochrome, used to make stainless steel.
Merafe decided against exercising an option to increase its stake in the venture to as high as 26%, which would have required funds from a sale of new shares, because of conditions in the equity market, it explained.
The company, which rose 0.8% to R1.23, has fallen 26% in 2011 as costs have risen and demand for stainless steel has remained subdued.
“Production from the new smelter is scheduled to begin in the first half of 2013, by which time the market is expected to be short of supply,” Merafe said. CEO Stuart Elliot wasn’t available for comment when Bloomberg News phoned his office.