Merafe Resources' profits plunge after soaring electricity costs close smelters

Merafe Resources, a South African company, reported a 72% drop in its full-year profits on 'Monday. This was after it suspended operations at its ferrochrome smelters because of high electricity prices.

Merafe’s headline earnings per shares fell from 42.9 South African Cents to 12.2 South African Cents for the year ending December 31, 2025.

The?company that operates a joint venture ferrochrome with Glencore?idled their plants in April 2025, citing rising power costs and increased competition from Chinese smelters.

In fiscal 2025, the ferrochrome production from the Glencore-Merafe Joint Venture fell by 63% to 112,000 tons. The year saw a 14% increase in production costs, mostly due to the lower output.

South African smelters struggle to compete with Chinese competitors amid power tariffs that have risen more than 900% in the last few years, putting thousands jobs at risk.

The South African energy regulator, in 'January, approved a reduction of 35% on electricity tariffs to?Merafe, and its fellow producer Samancor. This allowed Merafe to restart the Lion Smelter last month, which was their largest plant.

The state-owned power utility Eskom, in anticipation of regulatory approval, offered to cut the tariffs by another 29% on February 27. Reporting by Nelson Banya, Editing by SumanaNandy and Tom Hogue

(source: Reuters)