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viewAfarak Group PLC

Afarak Group is a significant ferrochrome producer with an international spread of assets

Snapshot

  • Profits have been under pressure due to weak ferrochrome price and previous technical problems at Mogale alloys plant
  • New management installed at Mogale
  • Moving out of business rescue
Helsinki

Quick facts: Afarak Group PLC

Price: 30 GBX

LSE:AFRK
Market: LSE
Market Cap: £75.2 m
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What it does

Afarak Group PLC (LON:AFRK) is a chrome and alloys specialist with mines and a plant in South Africa, as well as operations in Turkey and Europe.

Headquartered in Helsinki, the group runs the Mogale processing plant, along with the Stellite, Mecklenburg and Vlakpoort mines, gaining full control of the mines in the first half of 2019.

Originally named Ruukki, the Finnish company has been mulling a switch of domicile to the UK to help with share illiquidity.

It's assets in Turkey produce niche low carbon and ultra-low carbon ferrochrome products.

How it's doing

For 2019, Afarak scaled down mining activity as the industry faced some big bumps in the road, with lower selling prices and a deterioration of the chrome ore and ferrochrome market amid unfavourable operational conditions in South Africa, particularly with power being expensive and irregular. Then coronavirus hit in 2020, and the South African operations were put into a business rescue programme, as mining volumes decreased by more than 50%. The company is currently working through that process.

The company is confident that it can get out of the business rescue in a reasonably short period of time, as the world market prices have recently improved and the cost of production is positively affected by the weakening of the ZAR/USD exchange rate.

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Inflection points

  • Recovery in ferrochrome price
  • Action taken by South African government to improve energy market  
  • Remedial action at Mogale starts to improve performance
  • Completion of share buyback and switch of listing to London

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Watch

Afarak 'resilient' and working to optimise business despite challenging markets

Afarak Group PLC (LON:AFRK) CEO Guy Konsbruck updates Proactive London on operations after what's proven to be a challenging start to the year for the firm. This month the chrome producer said it would shut down some of its production at the Mogale plant after coming under pressure from...

on 20/6/19

2 min read