Worth a shout

Finweek English Edition - - COMPANIES & INVESTMENTS -

in other sec­tors that have been qui­etly creep­ing up in value.

They are unglam­orous – even by min­ing stan­dards – but they steadily go about their busi­ness. Per­haps that’s a rea­son to like them. In any event, we think they are worth keep­ing a few tabs on for 2014. (20:80). It’s been tough fi­nanc­ing its R1bn share, but with Lion II, Mer­afe lifts out­put 18%. The share has been edg­ing up en­cour­ag­ingly.

“It is dif­fi­cult to pin­point t he r ea­sons f or t he move­ment,” said Mer­afe’s Ka­jal Bisses­sor, “. . . but the con­trib­u­tors are good pro­duc­tion and sales vol­umes, the an­tic­i­pa­tion of Lion II comi ng on stream, the in­crease i n first quar­ter fer­rochrome prices as well as the weaker rand.”

Ac­cord­ing to Mac­quarie Re­search, the ferr o c h r o me p r i c e is ex­pected to i ncrease 7.5% to $1.18/oz in 2014 while the first- quar­ter bench­mark price, which was re­cently agreed, was the largest in­crease since the first quar­ter of 2008.

James Ober­holzer, an an­a­lyst for Mac­quarie Re­search, said: “Chi­nese stain­less steel out­put con­tin­ues to ex­hibit strong dou­ble- digit growth, with Euro­pean out­put show­ing ini­tial signs of re­cov­ery.”

The one crit­i­cism about Mer­afe is that it doesn’t have much con­trol over its own des­tiny ow­ing to the dom­i­nance of Glen­coreXs­trata as a ma­jor share­holder. Per­haps, though, this is not such a bad thing ei­ther as the Swiss group has among the sound­est fun­da­men­tals in the re­source mar­ket.

There’s also talk Mer­afe will one day pay a div­i­dend. Fin­week scoffed slightly when CEO Zanele Matlala first men­tioned this last year. There’s noth­ing wrong with hum­ble pie, how­ever, es­pe­cially if it brings some much­needed light back to the stricken SA min­ing sec­tor.

Zanele Matlala

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