JOHANNESBURG (Reuters) – South African ferrochrome producer Merafe Resources reported a 70 percent rise in first-half profit on Tuesday despite a sharp drop in production following the company’s decision to shut some furnaces to cut power demand.
The country’s largest ferrochrome producer reported first-half diluted headline earnings per share of 5.5 cents, in the middle range of its guidance to the market, compared to 3.4 cents in the same period last year.
Headline earnings per share is the main profit gauge in South Africa and strips out certain one-time items.
Production of the ferrochrome metal used in steel-making fell 21 percent in the six months to the end of June.
Merafe, which operates a joint venture with London-listed Xstrata, struck a deal with state-owned utility Eskom to shut seven of its furnaces until the end of May and allow the power producer to buy back the electricity the plants would have consumed.
The compensation provided by Eskom was adequate to cover for lost profits from the suspended output, the company has said.
South Africa has been struggling to meet demand for power in Africa‘s biggest economy.
Merafe also said its flagship Lion II project to lift production at its Lion ferrochrome plant remained on budget and on track to be completed in the second half of 2013.
Shares in the company are down nearly 12 percent so far this year, compared with a 10.19 percent rise in Johannesburg’s All-Share index.