Merafe Resources doesn't cease to surprise rivals and investors alike. After surging an enviable 212% on the stock market last year, the ferrochrome producer is this year shaking the 2008 Top Empowerment Companies (TEC) rankings in a big way.
Merafe's operations take place mainly through a ferrochrome producing joint venture with Swiss-based mining giant Xstrata. The joint venture, called Xstrata-Merafe Chrome Venture, has been touted as the largest ferrochrome producer in the world.
Merafe has ambitions of diversifying its portfolio. In pursuit of this ambition the group established a 50/50 coal mining joint venture with Scharrig Mining in June last year.
The group has steamed ahead from last year's number 49 to the second position in overall TEC rankings, after garnering a total BEE score of 79 points. This makes Merafe the most empowered mining firm trading on the JSE. It has pipped diamond producer Trans Hex, which ruled the resources sector in last year's TEC rankings. Trans Hex managed to produce a total BEE score of 61 points in the current rankings and came second after Merafe. The Top 10 of the resources sector also features Petmin, The York Timber Organisation, Hulamin, AngloGold Ashanti, African Rainbow Minerals, Exxaro Resources and Sasol.
Having listed almost 10 years ago, Merafe, previously named SA Chrome, has undergone several changes and made serious strides on the BEE front. Its shareholder base comprises Allan Gray, which holds close to 15% while state-owned financing house the Industrial Development Corporation (IDC) owns 23%.
Merafe's BEE credentials can, to a large extent, be traced back to its links with prominent black economic empowerment (BEE) player Royal Bafokeng nation, which holds a 31% stake in Merafe - making it the single largest shareholder.
As a result, the ferrochrome producer managed to produce an ownership score of 21 points. That means it claimed 100% of points available in the ownership aspects of the scorecard plus one more bonus point.
The group scores 51,2% in black economic interest.
Today, the mining player is under the stewardship of chairman Chris Molefe and CE Steve Phiri, who both held senior positions at Royal Bafokeng's investment arm.
Phiri, a law graduate, was appointed to his current position in 2003. Until then, he was in charge of the asset-rich Royal Bafokeng's corporate and legal affairs.
For a player with strong roots in the community, Merafe lived up to expectations. It scooped full marks for the socioeconomic pillar of the broad-based empowerment scorecard. On skills development and preferential procurement elements, it did particularly well.
However, a look at its employment equity and black management scores is less than inspiring.
Over and above the fine achievement on the BEE front, the group is well poised for growth.
Merafe delivered a sterling set of results for the year ended December 2007. Revenues rose by 61% to R1,6bn with posttax profit jumping 73% to R240m.
The stock, on the other hand, has advanced from just 75c/share at the beginning of last year to flirt with levels of 300c, while the market cap has broken above R6,5bn.
