Merafe Resources Limited (RZT.F) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Merafe Resources Limited Interim Results Presentation. [Operator Instructions] Please note that this call is being recorded. I would now like to hand the conference over to Zanele Matlala. Please go ahead.

Good morning. Welcome to the Merafe interim results presentation. Ditabe and I will take you through the presentation and Japie Fullard, the CEO of Glencore Alloys will -- is also on the line and available for questions at the end of the presentation. The global economy has recovered from the depth that it fell to in 2020 as a result of COVID-19 lockdowns. This recovery has contributed to the chrome sector, recovering as well, and boosted the performance of Merafe. On Slide 4, which is a summary of our performance, we are pleased with the improvement in the total recordable injury frequency rate. The continued implementation of COVID-19 protocols enabled our operations to operate without significant shutdowns for the 6 months to June 2021. The vaccination program has been rolled out and progressing well. Industrial production has recovered to pre-pandemic levels, resulting in robust demand for ferrochrome and chrome ore, and that led to better pricing on both. The increase in the month and the fact that there were no COVID-19-related shutdowns contributed to higher volumes produced. In addition, due to improved efficiencies, record smelting production was achieved. Cost pressures remain, especially on electricity. Financial performance was pleasing with 60% increase in revenue. Headline earnings of ZAR 0.232 per share were recorded compared to ZAR 0.011 in the comparative period. An interim dividend of ZAR 0.07 per share has been declared by the Board. If we move to Slide 6. Recovery -- price recovery was boosted by robust demand and supply constraints, mainly stemming from environmental restrictions in China. UG2 prices have reached USD [ 134 ] per tonne compared to an average of USD 129 per tonne for the full year of 2020. The ferrochrome prices also recovered notably, averaging about USD 0.95 per pound for the 6 months compared to USD 0.72 per pound for the full year of 2020. If you move to Slide 7 and 8. China continues to dominate our stainless steel production, accounting for 57% of production and 62% of ferrochrome demand. Stainless steel production increased by 29% to 29.8 million tonnes compared to 23.2 million tonnes in H1 2020. The growth in ferrochrome demand was just as impressive at 23% from 6 million tonnes in H1 2020 to 7.4 million tonnes in H1 2021. On Slide 9, increased demand for ferrochrome led to increased production, and it is expected that production for the 2021 full year will be 14.5 million tonnes compared to 12.5 million tonnes in 2020. Chrome ore imports into China increased from 6.1 million tonnes for the first 5 months of 2020 to 6.5 million tonnes for the first 5 months of 2021. South Africa accounted for 86% of the chrome ore imports into China. On Slide 11, where we deal with COVID. Having gone through the second and third wave in H1 and the third wave continuing into Q3, COVID risks do remain. As I alluded to earlier, there were no significant COVID-19 stoppages in H1. However, the focus on implementing COVID-19 protocols remain in place. We are pleased that the vaccination rollout at the operations are progressing well and should provide some protection to our workforce. On a sad note, though, 15 of our employees have succumbed to COVID-19 in the first 6 months of the year. On Slide 12. Health and safety of our employees remain a key focus area for management, the goal of being to achieve zero harm. There was a 17% improvement in TRIFR from 3.91 in H1 2020 to 3.24 in H1 2021, and there were no fatalities in the period under review. On Slide 13, the rapid portion of ferrochrome production increased to 199 kilotons compared to 120 kilotons in H1 2020. This is a remarkable achievement given that Lydenburg smelter and Rustenburg Furnace 5 remained under maintenance throughout the period under review. Rustenburg Furnace 5 will be brought back into operation during Q3. On Slide 14, we continue to focus on cost management as cost pressures increase. Production cost per tonne decreased by 11.4% from December 2020 as a result of higher volumes produced and lower chrome ore prices. However, lower cost bridges from inflation, which is mainly on salaries and wages, electricity tariff increases of 15.6%. This remains a key risk for our business together with the certainty of applying. The cost of reductants also increased mainly as a result of the need to import coke and anthracite due to inadequate local supply. Fuel and freight cost also increased that are contributing to cost pressures. The Venture is in the early stages of evaluating options for renewable option -- for renewable energy. At this point, I'll call upon Ditabe to come and give you the numbers.

Thank you, Zanele, and good morning to all on the platform. The operating environment across our markets have seen some improvements that remained volatile. These improvements have contributed to our performance for the 6 months. This performance was driven by increases in volumes sold as well as prices achieved. Our financial review starts off with revenue assessment on Slide 16. Total revenue increased by 60% from ZAR 2.3 billion to ZAR 3.7 billion. Ferrochrome revenue, which made up 86% of our revenue, increased by 61% and chrome ore revenue increased by 55%. As Zanele indicated, these increases were due to both higher volumes sold as well as improved pricing achieved. We saw the rand on exchange rate strengthened over the period, and this has partially offset the revenue growth increases. Moving to Slide 17. In our trading statement, we guided an increase in earnings compared to the prior period. This slide details that period-on-period comparison. Both the basic and headline earnings are higher than in the prior period. Since the impairment losses still was significantly lower, basic earnings are almost equal to headline earnings. Impairment loss was specific to an asset that was written down to ZAR 1 and no CGU impairment was recognized over this reporting period. Basic and headline earnings for the period were ZAR 0.23 per share and ZAR 0.232 per share, respectively. Moving to Slide 18. This slide reconciles H1 2020 EBITDA of the Venture with the same figure for H1 2021. The slide shows the proportion of each of the variances in percentage terms relative to the H1 2020 EBITDA as the base. The following contributed positively to the H1 2021 EBITDA: the first contributed revenue volumes and prices due to market recovery; second was standing charges, which were lower as a result of an increase in capacity utilization due to fewer production stoppages; and finally, foundry and other factors including lower PSV office costs and higher interest income and on the PSV cash balances. The following contributed negatively to the H1 2021 EBITDA: first, the cost volumes due to higher sales volumes; secondly, general inflationary pressures; and finally, the foreign exchange impact of a stronger average rand exchange rate. The net result is H1 2021 EBITDA, which is 488% higher than the prior comparative period. Moving to Slide 19. Here, we reconciled Merafe's share of the Venture's EBITDA to Merafe's profit after tax. From our attributable share of the Venture's EBITDA, the following costs are deducted: operating costs, depreciation and amortization, impairment as well as current and deferred tax being the biggest charges to EBITDA. The following income was added to EBITDA: Merafe's share of profit from Unicorn Chrome, Unicorn Chrome associates as well as net financing income. The resulting profit after tax is for ZAR 576 million. And then moving to Slide 20. This represents -- the slide presents there Merafe financial performance in an income statement format. We have already discussed revenue variances. Foreign exchange loss shown here represents the effect of the revaluation of net working capital balances and was impacted by the appreciation of the rand against the dollar. Operating expenses were higher period-on-period, primarily due to higher volumes sold. Other key components of this is cost of sales, which makes up a significant part of our operating costs. As Zanele indicated, area production costs per tonne decreased by 11.4% against -- versus the 31 December 2020. And this was primarily because of higher volumes produced and lower cost of chrome ore. As Zanele indicated, our standing charges were lower over the reporting period as well. These 2 factors being lower cost of sales and low standing charges have impacted our revenue margin positively. Operating expenses were negatively impacted though by general price increases, including higher electricity tariffs and then flat fixed costs, largely included in the cost of sales figure as well as increased fuel and freight costs. Merafe's corporate costs were higher than in the prior period due to an increase in the share-based payment expense because of appreciation in our share price as well as an increase in our CSI spend necessary for BBB, BB sales forecast. Our depreciation charge for the period is low due to impairment losses raised over the years. We have already explained the reason for the substantially lower impairment charge. Our current tax amount is a result of an increase in profit over the period and the deferred tax charge is due to timing differences largely from our capital expenditure. This gets us to profit after tax for the period of ZAR 576 million. Moving to Slide 21. The bridge balance sheet is presented on the slide. Noncurrent assets increased due to capital expenditure over the period, which increased fair value of property, plant and equipment. The figure included intangible assets. Moving to current assets and starting with inventory. Some distorting are experienced over the period, given the increased level of sales volumes. Closing inventory volumes reduced to 79,000 tonnes from the year-end levels. These volumes represent 2 to 3 months of sales. The rand amount of inventory only reduced marginally since inventory were alluding to that inventory at spots as well as consignment stock. These stock parcels are more expensive since they include capitalized transport cost. Trade and other receivables increased due to an increase in sales over the period. This year is also affected by the timing of receipts from customers. Derivative moved from a liability to an asset principally due to improvements in commodity prices. Cash increased mainly due to an improvement in earnings. The noncurrent liability includes the rehabilitation liability of ZAR 184 million. And the largest current liabilities, trade and other payables of ZAR 875 million, which is an increase from the year-end balance of ZAR 644 million. Moving to Slide 22. Here, we analyze the reconciliation of cash. We opened the year with a cash balance of ZAR 278 million. Net cash from operating activities added ZAR 635 million to this cash balance. Improved profitability was the key driver of the increase in cash flows. Cash was used to fund the following: capital expenditure of ZAR 178 million in total. CapEx increased from 2020 levels to allow for some necessary capital expenditures that was held back in 2020. Cash preservation remains one of the key focus areas for our business. Disposal of assets led to small proceeds, and following commencement of our share repurchase program, ZAR 5.8 million has been spent to date on the buyback. The repayment of the lease liability was an outflow of ZAR 2 million. And finally, foreign exchange effect led to an impact of ZAR 71 million. We closed the period with a cash balance of ZAR 797 million, and this includes Merafe's own cash as well as its share of the cash at the Venture. Moving to Slide 23. This presents Merafe's debt headroom and a breakdown of our cash balances. The company was un-debt to an extent. Merafe's headroom consists of facilities in place at the PSV to fund operational requirements as well as ZAR 300 million revolving credit facility that Merafe has with ABSA. The breakdown of our cash balance sheet is also provided on this slide. Moving to Slide 25. The Board has decided to declare an interim ordinary dividend of ZAR 0.07 per share. This represents an amount marginally higher than 30% of our headline earnings. The dividend was informed by an improvement in earnings and cash flow generated. Final dividend will be considered based on 31st December 2021 full year results and based on market conditions then. Moving to Slide 26. As reported when we announced our 31 December 2020 results, Merafe initiated a share repurchase program on 4 January 2021. Program is within the general authority approved by shareholders at our AGM. As of 30 June 2021, 0.461% of the company's issued shares have been repurchased. This represents 11,577,378 shares, which were repurchased for a full consideration of ZAR 5.8 million. The share buyback will continue for the year, and guidance will be obtained from the all-in due costs, whether or not we increase the price ceilings set for the repurchase. Thank you all for your attention. I will now hand it back to Zanele for final remarks.

Thanks, Ditabe. In conclusion, the global economy is expected to grow by 6% for the full year of 2021. And on the back of the growth, stainless steel production was expected to grow by 17% for the year. This should augur well for ferrochrome demand. We have actually started seeing an uptick in prices from about mid-July. On the production for the year, we guided that, that should be between 70% and 80% of installed capacity. We will continue to focus on cash preservation and operational efficiencies. Thank you. We will now invite questions first from the call and then webcast. [Operator Instructions]

[Operator Instructions] The first question we have from the conference is from Tim Clark of SBG Securities.

Can you hear me?

Yes, we can, Tim.

I've got several questions. So maybe we can just do them one by one. The dividend level and the cash balance level, I mean it screams of an extremely lazy balance sheet and highly inefficient capital allocation. And I just wondered if you could share how the Board thought about that because you're sitting on enormous amounts of cash. You do have a little bit of tax obligation, I suppose, to come. And what was it? Is there some major projects that are in the wings or some M&A? Or why did the Board decide to retain so much cash? That's the first question.

Okay. Thanks, Tim. I suppose the first point is that the dividend is in line with the policy, which is the 30% of headline earnings. Obviously, we normally take into account the cash level, and there is an option to pay higher dividends. But this is an interim period, so the Board's thinking was that in the next half, there are still some risks, one being COVID and likelihood of maybe the fourth wave and some logistics challenges. So on that basis, the Board thought rather weight the dividends towards the end when we set in the results for the full year. But I can confirm that there is no M&A that is under consideration. So it has no issues around project or anything like that. So it was just a cautious approach, but also complying with the dividend policy as it stands.

Okay. I mean the shareholders I've spoken to this morning have been very disappointed. So there is an extent to which it's a conservative approach and the extent to which it's an inefficient approach. But perhaps, we'll wait to see what the second half numbers look like. Then can we just talk about the market just a little bit? You've spoken about the fact that you saw some reasonable price increases in demand. I just wonder if you're sort of thinking or planning to go back to the level of price that we were at before. Are you seeing the current prices as an anomaly that you can't rely on, and maybe we should be going back towards a sort of ZAR 0.60 and ZAR 0.70 type prices that we had for quite a long period of time? The market is -- I mean, we're seeing steel curtailments and environmental curtailments across China at the moment in all of the mine. So that would give us support. Perhaps, share your thoughts on the market with us.

Tim, I would think that sort of level of ZAR 0.72 or -- that we had for the last 2 years were more of an anomaly because it actually led to a lot of production being taken out of the market. I mean if it was normal, then it wouldn't have led to that. Obviously, it meant the cost were higher than prices for a lot of producers and especially, from a South African perspective, some production being taken out. I think what can sustain the price of currency is that the demand seems to have returned partly because of stimulus, and you've seen increased demand for white goods and construction. And if you just look at the stainless steel projections, maybe Ditabe can give some color to that and that from a CRU perspective. I think increased prices can be sustained, but at what level of increase, that I suppose what we can answer now. Ditabe?

Thanks, Zanele. I mean, obviously, forecasts are taking the sense that they are dependent on a number of factors. Based on what we know now and based -- certainly, based on the research that we read around, especially the short term, is that demand is still strong. And this can also be seen in there. The number that Zanele mentioned in that presentation of 17%. Actually, the growth CRU was forecasted for the rest of the year. And I think together with that, obviously, that there is strong growth expected from a ferrochrome point of view so much so that for the year, there's a deficit of about 300,000 tonnes forecast by CRU. What also contributed, obviously, to the demand for ferrochrome especially the increase in prices is also what's happening in China, especially around the Inner Mongolia region where there's a power restriction. Understanding is that, that is still the case. And for Eskom, that's still that way, suppose that bode well for the ferrochrome industry in general.

All right. I mean it sounds like you're quite bullish on the market, which is strange compared to your very cautious approach for the second half. But the -- I suppose we'll balance that off. Maybe can I -- tell me while I'm talking to you, can I just talk to you about normal levels of depreciation for a year and normal levels of CapEx for a year? If you're budgeting a year ahead, what are you thinking about normal CapEx levels, normal depreciation? We haven't really had a lot of normal lately. It's been quite odd, right? We've had bumpy markets.

Yes. So from a depreciation point of view, Tim, I think the sort of levels that you've seen for interim will probably continue for this year to the extent that impairment hasn't been the best. Obviously, to the extent that there is movement on that plant, it will certainly reflect on depreciation as well as because they're going to...

Yes. For sure. But like -- so we're talking ZAR 40 million for the year then, ZAR 19 million for the first half, ZAR 40 million for the year?

Correct. And in terms of CapEx, I think similar comments that were made previously around the effect that this year, we've obviously seen more CapEx spend because it was also a function of catch-up capital that was delayed in 2020. And then in terms of our overall CapEx, we have indicated that there is generally a positive correlation between that and production costs. And historically, that correlation is represented by about -- call it, about 10% or 12% of production costs. So I think if you view that as a sort of estimate, that should give you that sort of number that you could work with.

Did you say 12% of production costs? Or was there a range?

10% -- about 10% to 12%.

10% to 12% of production costs?

Right.

Because previously, you've sort of said to us, it's something like around about ZAR 400 million to ZAR 450 million, and you're behind that run rate. You're saying that you're actually ahead of where you thought -- you've actually pre-spent? So what are you thinking for the year then? What's your budget for this year?

So I think if you work with the ZAR 450 million for this year, that should be a safe number to use in a range.

But then there's going to be an enormous number in the second half. You had ZAR 178 million.

Yes. Tim, what you should take into account is that also in the second half, you've got 2 months of winter. So that's more where your maintenance happens. Japie, I don't know whether you want to add.

Yes, 100%. Currently, Tim, we believe that with quite big projects, we are rebuilding the lines, Furnace 3, that huge amount of capital that we are spending currently. Also some other projects at Rustenburg and at other operations. We're also going to run a bit later at Boshoek. Our capital spend will also be there a bit later because we didn't pull back all the production currently. So I mean, it's just the way that we manage also the contractors or the business partners. Obviously, with COVID, a huge amount of concerns with that as well. So it's extending actually our maintenance period a bit, if that makes sense.

So ZAR 450 million for the year is a good number, right? So you had ZAR 178 million for the first half, it's a huge acceleration.

Yes. I mean ZAR 450 million is at the top end, Tim, of that range. But yes, about ZAR 400 million, as I indicated in Q4.

ZAR 400 million? Okay. And then, sorry, just in terms of your comment about utilization, you're 75% to 80% utilization rate. Do you include Lydenburg in that number as capacity? Or have you removed Lydenburg capacity given its closure?

It's included.

It includes Lydenburg. So the total capacity then is? Just so I can double check my model.

It should be just under 2 million. Total capacity is [ 22 339 ] in total. That's the installed capacity. But if you remove Lydenburg, it should be just under 2 million.

Just so that I use the same percentages that you're guiding to, which number must I use, Zanele?

What we're guiding is of installed stability, which includes Lydenburg.

So 2.2.

Yes, [ 22 399 ], I think.

[ 22 39 ]. Okay, I'll just double check my model on it.

We have no other questions on the conference call. I'll hand over to webcast questions now.

Thank you. On the webcast, there are a 2 questions. We'll just go through each one of them. The first one is, do you expect a typical strong H2 from a volumes point of view? I think we've kind of touched on that. The second one is a strong growth in stainless steel demand. A positive development has been key to the buoyancy in the ferrochrome markets. I recalled one of the comments made -- we made, and the question is how sustainable is this? And what is your view of the market? I think we've also kind of touched on this. The next question is, please comment on the high chrome exports from South Africa, and what this is doing to South Africa's ferrochrome market share? And is the chrome export tax still going to be introduced? If so, when?

Thank you. Thanks, [ Martin ], for that question. The percentage of exports from South Africa has always been on the high side, but I think even higher in this period. And I think over the years, we've dealt with what it is that is going to the ferrochrome industry. The way we see it is that it's an exportation of jobs, but as far as the chrome export tax, as you know, the Cabinet announced that they will introduce that. But further than that, we haven't had any indication of timing or quantum or anything like that, but I'd also like to invite Japie to comment on that.

Thanks, Zanele. Yes, just in terms of the ore tax, obviously, from a ferrochrome point of view, we are still of the view that the ore tax could stimulate South Africa even more. I mean, ultimately, we do want to make sure that we beneficiate inside South Africa. So the ore tax, in our view, will still stimulate that specific growth. Where we are with the process is exactly as what was already stated. As Zanele said that the government already talked about it. It's already what we understood was approved in principle, and they must just now execute on it. Thanks, Zanele.

Thanks, Japie. Another question from...

I think there are 2 questions that are kind of electricity-related and Zanele, just if we you could assist with this. The first one is, given the issue of rising electricity prices, would it not be economical to build your own renewable capacity? And if so, what percentage of electricity needs could you potentially cover with such an investment? That's the first question. And as a kind of related question is, please elaborate on your renewable energy options, and what is being planned to make ferrochrome production in general and ferrochrome smelting in particular, [indiscernible].

Okay. Thanks, Zanele. Yes, quite a couple of notes to be mentioned is that if you have a look at the renewable energy -- first of all, you look at the 3 areas in our view. So where is the PSV also looking in these 3 areas. And the first one is on-site generation, and this is where you take the off-gas and you then turn the off-gas into electricity by putting in the Swedish Stirling engines or all various type of equipment. So we are investigating this, and we're already trialing pilots, and we've also already have done quite a lot on that. So that's the first thing is how can you make your on-site generation possible? And then obviously, if you can do that, the whole operation will be much more efficient. The second one is also looking at wind and solar. So it would be perhaps just off-site, but it could still fit into the same complex, if I may say this. And we are also investigating a lot of options in that regard. And then the third one that we are also investigating, and it's very close to pre-feasibility. We've done a lot of work on this already, and this is this virtual power purchase agreement where you build the IPP in the Northern Cape, also solar and wind, and then you reel it onto the grid. And that -- so that means that's where the wheeling agreement with Eskom is going to be critical for us. So we, at the PSV, are definitely looking at all 3 of those areas. And I mean, obviously, if we can get this right, I mean, we will first look at maybe some smaller projects or pilots. But I mean what we wanted to do is to expand this up to 400, 450 megawatt. So it's quite a big chunk of our installed electricity capacity.

Thanks. Thanks, Japie, for that. And the next question is, your -- about that CapEx. Your cash paid was ZAR 10.4 million in net income statement. Tax equals ZAR 227 million, which includes deferred tax. How should we think about tax in general? So I mean our tax rate is -- the official tax rate is 28% and our tax liability is derived from that rate. But obviously, given that we are a mining company, there are provisions that allow for a deduction of CapEx, which we deduct fully. And the kind of disconnect between the [ ZAR 10 million ] that was paid and the [ ZAR 72 million ], that had to do with the timing of when the payment was made relative to a projection for the full year. And in terms of our provisional tax payments and the liability in the balance sheet was based on the numbers at the end of June and based on, obviously, forecast for the full year, which is a requirement of how that tax liability needs to be recognized in the book. So long story short, it's the result of the time when the provisional tax was made as well as when the extra liability towards raising the balance sheet. Hopefully -- that's what our tax question. The next question is concerning how much CapEx is available to be used for share buybacks. So what guide us is the authority that we've received to buy back up to 10% of our shares back. We have indicated that the price ceiling that had been set for purposes of buying back the shares, there is the possibility that with the price having moved up, that the Board might approve increasing that threshold to a higher number, which obviously would then impact the amount that is due for share buybacks. And the next question deals with working capital. And the question is, there is ZAR 1.8 billion in net working capital, this exceeds the enterprise value of Merafe. Two questions, is it possible to speed up the working capital cycle to release cash? And then the second question is, I assume that the ZAR 1.4 billion in stock before at the end of June has been converted into cash, which suggests that the cash balance is much higher than the ZAR 725 million reported. Can you provide some guidance on the current balances? Yes. I mean working capital is an area that gets forecast from the business. And in terms of the 3 balance sheet items that make that up. One is accounts receivable, which is always a function of the sales that are made, and generally, there are higher sales made in the quarter, chances are it would impact the debt that's balanced negatively in the sense that the balance will increase. And we've seen it happen over this quarter ended June. In terms of the target with our data base, we always aim to maintain a balance of 60 days. And that has a blend of those that paid cash, those that -- customers that paid cash or near cash with the letter of credit, these are most Chinese customers. And then at the extreme end, the U.S. customers that pick up to, what, 90 or more days to pay. So the 60 days is the blended average that we try to achieve with our data. From an inventory point of view, the numbers -- inventory levels have come down overtime. And as we've indicated, the latest numbers are even lower than the December numbers, which already saw a huge reduction from the [ area ] levels. This tag represents 2 to 3 months of sales, as we've indicated, and very largely because of the nature of our business that requires us to have several stock parcels and in different locations also for the convenience of customers. So we have stock at our plants. We have stock at the ports. We also have consignment stock, which as I indicated, makes it easy to reach certain customers. And the benefit we have with some of those customers is a preferential sense that's taking the Venture based on that convenience that they get from the availability to stock. And then finally, accounts payable. And we've seen improvement -- kind of improvements in that as well in the sense that the increase that we've seen in the balance over the period has kind of offset some of the outflow that we've seen coming through from the increase in the debt balance. Hopefully, that deals with that question. And moving on then to the next question. Okay, Zanele, can you state the rest?

Yes. The next question is, assuming you have similar or better results in H2, there will be a significant fair cash build up. As a shareholder, we want to see special dividends. Anything less than paying out all excess cash will reflect poorly on efficient capital allocation and the Board. Do you agree? The approach of the Board has always been to go according to the policy. And the policy is 30% of headlines. But it does allow for any cash above the between ZAR 150 million and ZAR 250 million, which is combined. So the way we normally look at it is, ZAR 200 million at the Venture and ZAR 50 million at Merafe. Anything above that, the policy allows for it to be paid as a dividend. And I think the Board will consider that. Obviously, in considering the dividends, they also look forward to see what the market visibility is, what the issues may be in the coming up 6 months. And once that has been taken care of, so we normally dip it to the normal solvency and liquidity test. And if those are okay and we've got the cash, then there shouldn't be an issue. I think what we mustn't forget is that this is an interim dividend. There is still an opportunity for the full year dividend, which will take care of those issues around cash. Hope that answers your question already.

Thanks, Zanele. The next question is how many South African ferrochrome jobs are being lost through South African chrome ore exports?

Maybe Japie, I don't know if you'd like to take that one on.

Yes. Thanks, Zanele. I mean if we just have a look at the PSV, that means Glencore Merafe, we've lost about 1,000. And then what we've also gathered is through the other operations, I know [indiscernible] closed down. I think in total, it was about 2,500 that already lost their jobs. If you think about capacity that's been cut, I mean, we've got installed capacity in South Africa at 5.6 million tonnes, and we're currently only producing 3.6. So I mean if you have a look at the 2,500, this was lost over the last 1.5 year, in my view. I mean if you have a look at the bigger -- since some of the previous smelter capacity where we cut out, definitely much more than that.

Thanks for that, Japie. I do not see any other questions. So at this point, we'd like to thank everybody for attending and for all the questions. Thank you very much.

Ladies and gentlemen, that concludes this event. Thank you for joining us. You may now disconnect.