KEY POINTS
- Global ferrochrome demand rose 5 percent in early 2025.
- South African ferrochrome production fell 27 percent due to smelter shutdowns.
- The ferrochrome industry faces delays in government intervention.
Once the undisputed leader in global ferrochrome supply, South Africa is watching its dominance slip away — even as demand for the alloy surges worldwide.
The country’s output fell sharply in the first half of 2025, despite a stable electricity supply and favourable Eskom pricing, while competitors stepped in to fill the gap. Ferrochrome, a critical ingredient in stainless steel, commands roughly five times the value of raw chrome ore.
Yet South Africa is increasingly exporting unprocessed ore, effectively handing competitors the value-added advantage it once held.
Ferrochrome production plunges despite power stability
According to Johannesburg-listed Merafe Resources, domestic ferrochrome production dropped 27 percent in the six months to June 30, driven largely by smelter suspensions.
This comes even as global stainless steel production rose 4 percent and ferrochrome demand climbed 5 percent. Prices have rebounded 10 percent from early 2025 lows but remain insufficient to restart idle furnaces.
Global ferrochrome demand outpaces production growth
Worldwide ferrochrome output fell 8 percent, with South African producers’ cutbacks the main driver of the decline. Merafe CEO Zanele Matlala told investors that chrome ore exports will increase, reflecting a “structural change” in the business.
She noted that production costs per tonne of ferrochrome fell 5 percent thanks to lower input costs, but chrome ore costs rose 7 percent due to labour, engineering, and utility expenses.
Government weighs measures to revive ferrochrome industry
The government has pledged support for the industry, including potential electricity tariff adjustments, export controls, and ore export taxes. But no timelines have been set, and Matlala cautioned that none of the measures will provide quick relief. For now, smelter suspensions at Boshoek and Wonderkop have shifted focus toward mining operations.
Merafe’s financials reflect the shift: ferrochrome sales accounted for 51 percent of revenue in the first half, but revenue from the alloy fell 60 percent, while chrome ore revenue slipped 17 percent. Stronger rand exchange rates and standing charges further eroded earnings, with Ebitda down 57 percent compared with the same period last year.
