Chairperson's report


Merafe's performance in 2023, was again exceptional. This is manifested in our reported revenue, EBITDA, profit after tax and net cash on hand at the end of the reporting period. I am also pleased to report that the operations of the Venture performed well with regard to production (despite the planned pullback) and its identified sustainability criteria with the exception of two fatalities at our operations which I discuss in more detail below.


Abiel Mngomezulu

Over the past two years, I commented in this overview on the Judicial Commission of Inquiry into State Capture and that this shone a welcome light on corruption and state capture in our country and the undermining of state institutions and enterprises that took place. Unfortunately, due to how intricate most of these corrupt tendencies were, a year after President Cyril Ramaphosa announced government's plans to act on the recommendations of the commission of inquiry into state capture, barring the work of the Special Investigative Unit, very little on the face of it has been achieved by way of legislative reform or convictions. The lack of real progress in combatting crime and corruption is a concern to all South African citizens and continues to impact negatively our access to foreign and local investment which is key to growing the economy that would address the key challenges of unemployment and poverty facing the country.

The continued resilience of South Africans in dealing with the challenges they face will again be tested in 2024. It is only sustained ethical leadership in business and society led by ethical government that can lead to a turnaround in sentiment and create a conducive environment for new investments.

Apart from crime, corruption and unemployment, two issues are of particular concern in order for the business to compete on the international stage:

  • Firstly, loadshedding (both the frequency and intensity) increased during the reporting year, negatively affecting CPI and electricity prices. Despite some companies and citizens moving off the grid and becoming self-sufficient and government funding relief, Eskom's threat to the economy extended beyond loadshedding as capacity constraints remained a major risk to businesses in the country resulting in stagflation; and
  • Secondly, transport infrastructure is increasingly becoming a major risk to the economy. Rail freight infrastructure is collapsing, and road freight can only take up some of the demand. Segments, heavily dependent on infrastructure, struggled to grow in the respective sectors i.e. the primary sector (agriculture and mining), secondary sector (manufacturing and construction) and tertiary sector (trade, transport, communications, financial and business services and personal services).

This is further commented on below in this report.

On the global front, conflicts are unfortunately continuing unabated in the Ukraine and the Middle East with both having no clear end in sight. It is difficult to assess the longer-term impact on global markets and business, but the suffering of ordinary global citizens is a sad state of affairs, and again leadership is needed to end wars and conflict and to find solutions around global issues.

Our chief executive officer's strategic review mentions in her report the issues that impacted the performance of the Company in 2023. Of specific importance is that, despite excellent performance, the South African ferrochrome market share will continue to be lost to international ferrochrome production because of the rising energy costs in South Africa and on the back of cheap South African un-beneficiated chrome ore exports. The government and industry need to continue working together to ensure local beneficiation of its resources and efficient use of its existing infrastructure.

Despite an ever-changing world and business environment, we will continuously remain focused on making our business a success whilst providing a positive contribution to our stakeholders and the broader society.

Financial performance

As I mentioned in the introduction, 2023 was an excellent year in terms of all the key financial indicators such as revenue, EBITDA, profit after tax, net cash generated and net cash on hand.

The financial performance of the Company has been addressed in the chief executive officer's strategic review and the financial capital section in this report. The Chief Executive Officer has also provided commentary on the strategy of the Company going forward and the benefit the Company has gained from its focus on ferrochrome (and ancillary businesses) and maximising cash flows from the Venture.


Safety remains the number one priority of Merafe and the Venture.It is thus with great sadness and regret that I have to report that there were two fatalities at our operations. The first fatality was at our Boshoek operation in September 2023 and the second fatality was at our Rustenburg operation in November 2023. Our condolences are extended to family, friends and loved ones of the deceased. After a number of fatality-free years this is a setback for the Venture and of great concern to the Board. The fatalities remain under investigation.

These unfortunate events occurred despite the considerable efforts made by the Venture in 2023 and improvements in a number of areas.

For further information, see the Safety section in human capital on this report for further details and safety information, as well as the efforts made by the Venture in respect of safety. Please also see the manufactured capital section The Venture is continuing to do all it can to ensure that the high standards of safety are maintained.

Key challenges

Despite the excellent performance of the Company in 2023, power costs and continuous failures at Eskom remain a concern for the Company and our industry. Above average tariff increases together with supply challenges remain serious areas of focus for the Venture and the industry. The Venture continues to be impacted by loadshedding and this hinders the ability of the Venture to be a reliable partner to our global customers. There needs to be a long-term and sustainable solution to the country's power supply and pricing. It is in light of this that the approval of the Venture's Negotiated Pricing Agreement application by Eskom and the National Energy Regulator of South Africa is a welcome development. This should help the Venture with price certainty.

The Venture is continuing the construction of renewable energy facilities and supply of power. For more information, please see the manufactured capital section in this report.

As reported in 2022, the infrastructure of the railways and the ports has deteriorated even further and this continues to be a challenge to the South African ferrochrome industry. The inability of the railways to transport our product and inefficiencies at the ports has caused an excessive reliance on road transport resulting in backlogs and delays at the harbours. This not only results in delays in shipping our product (and negatively impacting the reputation of South African producers), but also creates opportunities for corruption and theft. The Venture continues to engage proactively with the governmental departments to attempt to find solutions to these critical issues, however frustrating and challenging it is. For more detail on this challenge to our industry please see the manufactured capital section, the chief executive's strategic review and the section in material issues in this report.

Water, a crucial input in our operations, is becoming a creeping problem in South Africa. Fortunately, the Venture has been proactive in mitigating/managing this risk by ensuring that adequate supply and storage facilities are in place at the operations. For more detail on this challenge to our industry please see the natural capital section.


We continue to take a long-term view of our business. In terms of achieving our strategic objectives, our ferrochrome interests will continue to benefit from investments in low-cost production facilities and technology at its operations. This has improved the Venture's sustainability by increasing the Venture's cost efficiency and production capacity in difficult trading conditions, but this also allows the Venture to take advantage of improving global conditions and demand as we saw last year.

We reported last year that we will continue to assess opportunities outside ferrochrome where this makes commercial sense. I am pleased to report that in 2021, we participated and invested in a PGMs plant in our western operations with our Venture partners and the plant performed well in 2023. Further, I am pleased to report that in 2023 we reached a similar agreement with our Venture partners regarding PGMs in the eastern operation with a commencement date of 1 January 2023. The positive performance of our PGM business can be seen in the results. For further information in this regard see the report of the chief executive officer's strategic review.

We remain committed to ensuring the long-term sustainability of both Merafe and the Venture and complying with legislation and overcoming any of the challenges we may encounter.

Our approach to sustainability and assurance

The directors have followed the materiality determination processes described in this report and have applied the results of these processes to formulate the material issues in this report. As you will see from the Material Issue section, the COVID risk, after careful consideration, was removed as a material issue. However, COVID-19 and its impact will continue to be closely monitored.

Merafe relies on the Venture and Glencore to obtain quantitative data with regard to sustainability indicators. I refer you to the sustainability review and summary on internal and external reviews, audits and processes in this report for information on Merafe 's and the Venture's review processes.

As we indicated last year, on an annual basis, the Board does a gap analysis of how the Company performed in terms of King IV as well as the steps taken to address issues where the Company was non-compliant. We are pleased to report that, while acknowledging that this is a work in progress, the Company in most material respects is compliant with King IV. Where we have fallen short, we have provided an explanation as well as the areas we will focus on in 2024. For more details on our reporting on King IV, I refer you to the governance section for the full report and compliance analysis.

During the year, the Board and the relevant committees took note and assessed the JSE's pro-active financial statement monitoring report, the JSE's guidance papers on sustainability and climate change reporting and assessed changes to the JSE Listings Requirements.

We agree with the assertion in King IV that good governance has its foundation in effective and ethical leadership and transparency and that integrated thinking and reporting on economic, social and environmental dimensions is key to this. Board decisions need to be made in an integrated manner, understanding the impact on these dimensions as well as the impact on value creation in the short-, medium- and longer-term.

Stakeholder inclusivity and responsiveness is key to the process. We are pleased to note that we have been reporting in an integrated manner and in terms of the Capitals – as recommended by King IV – for some years now and the feedback from stakeholders has been positive.

The Board

As Chairperson of our unitary Board, I am responsible for the overall effectiveness of the Board and its committees and for ensuring that we provide Merafe with effective leadership, uphold ethical standards, and are responsible, accountable, fair and transparent. I am also responsible for ensuring that we implement strategies aimed at achieving our economic, social and environmental performance objectives.

There is a clear separation between my responsibilities and those of the Chief Executive Officer, which is documented in our Board Charter. Our Chief Executive Officer is expected to focus on our business and ensure it is run effectively and in accordance with the strategic decisions of the Board.

We interact with our stakeholders at our annual general meetings and at presentations made by our executive management team when our interim and annual results are released. This year we again increased our focus on stakeholder relationships and in particular our relationships with our shareholders and our Venture partner. The Board has delegated the responsibility for engagement with our shareholders and potential investors to the Chief Executive Officer and the Financial Director.

I convey my thanks to our non-executive and executive directors for their valuable contributions to the Merafe Board deliberations and decision-making during 2023.

In February 2024, the Board welcomed Mr. Steve Phiri as an independent non-executive director and he will no doubt make a significant contribution to Board deliberations in the coming years.

The Board is satisfied that it has discharged its responsibilities as set out in the Board Charter. I look forward with enthusiasm to the members' contributions to the Board in the coming year.

Merafe team and Glencore

On behalf of the Board, I would like to thank the Merafe management team and our Venture partner, Glencore, for their hard work in delivering another exceptional financial and operational performance in the year under review.

Future outlook

The performance we had this year again provides confidence for the future and our diversification into PGMs together with our Venture partner is promising. We are also confident that strategy for cash preservation will also bring future benefits to the Company. I thank all stakeholders for their continued support.

Chairperson | 15 March 2024