Worth a shout
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.