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- Record-high chrome prices helped mining company Tharisa maintain a steady revenue.
- This despite it mining a quarter less reef than it did a year ago.
- Chrome was the standout performer for the period.
- For more financial news, go to the News24 Business front page.
Record-high chrome prices helped mining company Tharisa maintain a steady revenue during the first half of the financial year even as it mined a quarter less reef than it did a year ago.
The company reported a 51% drop in net profit to $54.7 million during the first half ended March 2023, coming off a $335 million revenue. Tharisa said it mined 26% less reef during the period. Mining in the period under review was impacted by unprecedented rainfall, which had a material effect on the ability to mine the right ore mix from the multi-seam open pit, said Tharisa, referring to its operations in the North West.
"Chrome was the standout performer for the period, with prices rising 41.1% to average at $247 per tonne," said Phoevos Pouroulis, CEO of Tharisa, on Friday. This almost double the $175 per tonne for which producers could sell the industrial metal during the comparable period to March 2022.
Measured in rand per tonne, the price of chrome jumped 64.3% due to the weakening rand against the US dollar. As the rand continues to weaken against the US dollar, Tharisa said this places it in a "relatively strong position" for pricing dynamics for the remainder of the financial year.
A single US dollar averaged R17.70 during the six months to March, up from R15.30 a year earlier. The local currency has weakened further since, hitting a low of R19.48 against the dollar on Thursday.
Shares in Tharisa rose 3% in early Friday trade.
"Chrome prices continue to trade at multi year highs-record spot prices when measured in Rand per tonne terms - as demand remained extremely buoyant, driven in part by the reduction of output from secondary chrome producers," said Pouroulis. "Inland logistical challenges for the industry and port complexities, means the supply chain remains under pressure. Our logistics team continues to access available modalities to deliver product on time to customers."
This is reference to the declining railway and logistics services that South African miners are having to cope with, in addition to the poor electricity supply.
"Both platinum group metals and chrome were underpinned by supply issues, which have and will continue to have an impact on the already tight fundaments, and with a lack of new projects, any additional production may be considered replacement production in this already tight supply demand scenario," said Tharisa, whose main operations are in the eastern limb of the Bushveld near Marikana. "While the PGM prices retreated, the fundamentals for the commodity remain fundamentally strong, with Tharisa uniquely positioned to manage the industry input challenges given our low use of electricity, open pit nature of the operations, flexibility of the processing plants and multiple revenue streams extracted from the run of mine material."
This ate into stockpiles, particularly in China, which are now at historically low levels. Tharisa hopes these, together with increasing demand for catalytic converters as a result of rising motor vehicle sales, will translate into higher demand for the platinum group metals.
The company said it supplies approximately 10% to 12% of China’s annual demand for chrome.
