Merafe reduces size to sustain high dividends
Its ferrochrome-producing joint venture with Glencore is its chief asset, so the weakening demand for stainless steel — and consequently ferrochrome — is a concern, as is the rising cost of electricity
Despite Merafe Resources’ share price declining by about 30% over the past three years, long-term investors have enjoyed robust returns thanks to the company’s generous dividend payouts. With cumulative distributions of 109c a share over the period — a total that matches its share price at the time of writing — this raises a crucial question: how sustainable are these dividends ?
The answer depends largely on the performance of Merafe’s core asset, the Glencore-Merafe Chrome Venture. Merafe owns 20.5% of this joint venture, while Glencore, a global commodities giant, holds the remaining 79.5% and is responsible for operational management. The venture operates several ferrochrome smelters in South Africa and exports chrome ore, a key raw material...
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