South Africa’s chrome industry well placed to ‘grow and prosper’

  • Wednesday, October 26, 2016
  • Source:ferro-alloys.com

  • Keywords:chrome ore
[Fellow]South Africa’s relatively easy to mine chromium reserves, combined with the current deficit in the chromium market as well as the expected increase in global stainless steel consumption, has ensured that the country’s chrome sector has every opportunity to g...
South Africa’s relatively easy to mine chromium reserves, combined with the current deficit in the chromium market as well as the expected increase in global stainless steel consumption, has ensured that the country’s chrome sector has every opportunity to grow and prosper, says the International Chromium Development Association (ICDA).
Racon emphasises the need for the South African chromium industry to maintain its status as the top chrome supplier to China, which is the world’s largest stainless steel producer, and ensure that it improves upper group two (UG2) beneficiation of the low-grade chromite concentrate produced as a by-product of the platinum mining industry that accounts for 31% of the country’s chrome ore and concentrate production.
He notes, however, that improving UG2 beneficiation may be difficult as the production of UG2 is still developing and the ailing global/South African platinum sector further exacerbates the issue. But, Racon states that it is “safe to say” that, as it has the world’s largest chromite resources, South Africa is “very likely to remain the top chrome ore producing country in the years to come”, despite some drawbacks for ferrochrome production such as its power supply deficit.
Given South Africa’s resources and the fact that global stainless steel production is expected to increase by about 3% a year for the next three years – according to Finnish stainless steel producer Outokumpu –  the country’s chromium sector is well positioned to grow on the back of the forecast improvement in market conditions.
Racon explains that, at present, there seems to be a deficit of chrome ore in the market, as the apparent consumption has exceeded global output. “Compared with 2013, when global output was above 30-million tonnes, global output in 2014 and 2015 decreased to around 29-million tonnes.”
“Without chrome there is no stainless steel, so, the chrome industry is really expecting a significant increase of stainless steel consumption and production. It is clear that the chrome industry is hoping for a chrome price that will cover its operational costs,” says Racon, noting that this price should be realised relatively quickly as commodity prices tend to increase once there is a supply deficit. He adds that chrome ore and concentrate prices have been soaring since the second quarter of 2016, on the back of strong Chinese demand and decreasing chrome stocks in China’s main ports.
He points out that the chromite in the Bushveld Igneous Complex in the north-eastern provinces of Limpopo, Gauteng and Mpumalanga is relatively easy to mine. Further, South Africa has access to the latest technologies and has relatively robust infrastructure in place, which ensures the country is among the lowest-cost and most environment- friendly chrome ore producers in the world.
In terms of ferrochrome, an alloy of chromium and iron-ore, Racon states that South Africa is the world’s second largest producer, as it was surpassed by China in 2012. “Last year, South Africa’s ferrochrome production accounted for 33% of the global production compared with China’s 36.7%.”
In 2015, global ferrochrome output declined in line with stainless steel production, which was down marginally. However, while stainless steel production has since recovered, owing to the drop in ferrochrome prices in 2015/16, ferrochrome production has not experienced a similar recovery.
For South Africa’s ferrochrome producers, the primary problem is the lack of reliable power supply from State-owned power utility Eskom, notes Racon, stating that this has drastically hindered production, though not as badly as in 2012.
Other challenges facing the ferrochrome industry include the need to buy or stabilise ferrochrome mining companies that were placed under business rescue last year and the need to generate capital to invest in new furnace technology as part of efforts to achieve maximum production capacity and remain globally competitive.
Racon notes that South Africa’s ferrochrome producers comply with strict environmental regulations and, most notably, use closed furnaces.
Additionally, some companies are supplying their own ore and concentrate rather than sourcing from other mines. “Some big players are known to have both chrome mines and smelters. So despite the electricity cost, which has been increasing over the years, the combination of raw material supply and efficient technologies may provide ferrochrome companies with among the lowest costs worldwide.”
Chromium 2016
ICDA deputy secretary general Sheraz Neffati notes that the ICDA chromium conferences are opportunities for the global chrome industry to get the latest market insights and network on a high level.
The Chromium 2016 conference, which will take place in Shanghai, China, from November 8 to 10, is considered a prime reference and is highly attended, she says. “More than 150 delegates from around the world will converge on a single destination that is always selected for having an interest in the chromium industry.”
China is the major importer of chrome ore, representing 90.6% of South African exports for the first quarter of 2016.
“This conference will showcase recent structural changes in the Chinese economy and will also cover global market dimensions from mining to processing and end-users, with a session dedicated to stainless steel,” Neffati notes.
She says that the event is a major highlight on the chrome industry calendar as it is also the event where the ICDA rewards industry achievements in the corporate social responsibility, environmental and safety fields; vital topics for the attendees.
“Chromium 2016 will be the place to meet, learn and move forward.”
 

 

  • [Editor:sunzhichao]

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