JOHANNESBURG (miningweekly.com) – JSE-listed Metmar aims to become one of South Africa’s top-ten chrome players in the next ten years, CEO David Ellwood said in an interview, adding that any export levy on chrome would only make the country less competitive.

The commodities trader recently entered into a R61.4-million transaction to buy a further 60% of Eastern Belt Chrome, taking its ownership to 80%, in line with its new growth strategy to rapidly become a meaningful chrome player. Metmar also has a share of Zimbabwe Alloys Chrome.

“In ten years time, we would like to be a multicountry chrome player and be able to provide different grades of material to the international markets, but we see ourselves as an integrated ferrochrome producer in the long term and let’s see how that road goes,” he told Mining Weekly Online.

Ellwood was of the view that to be a significant chrome player, South Africa was “the place to be in for the long haul and for the long term”.

“About 70% of the world’s chrome reserves are in South Africa, and 15% in Zimbabwe, which means both countries combined hold 85% of the world’s reserves. Chrome is something we believe in, and the demand for chrome will continue.”

China, which does not have any of its own chrome ore sources, is positioning itself as one of the lower-cost ferrochrome producers through the import of cheap ore from South Africa. One way to mitigate this is to impose an export levy, which JSE-listed Merafe Resources believes will force the Asian giant to import more ferrochrome.

But Ellwood said that Metmar did not believe that an export levy was the way to go. “Not competing in the international market would result in less material being mined or produced. This would lead to restrictions on sales and fewer jobs for South Africans,” he explained.

Another feature of the company’s aggressive growth strategy is beneficiation. Metmar plans to invest in crushing/screening capacity, as well as a washing plant in support of the South African government's vision to increase domestic beneficiation.

“I have always believed that beneficiation should happen closest to the source of a material. It does not make sense to export cheaper raw materials, such as iron-ore, chrome or manganese, and to put seaborne value at the highest costs possible.”

But infrastructure and power remained concerns in South Africa. “In order for people to beneficiate and to create as much value add as they can in a country of the resource’s origin, the infrastructure needs to be in place to allow the investor the opportunity to beneficiate. We are nervous in South Africa of infrastructural restrictions specifically around logistics and power.

“No power means there will be no new ferrochrome smelters or manganese smelters built. If you do not increase logistical infrastructure to allow the export of raw materials out of the country, then there will always be a bottleneck, as well as the maximum of materials that can be exported,” Ellwood said.

He called on government to “stand up to the plate” and to make investments in both power and logistics. “As those investments are made, there will be allocation of tonnages and we will see additional significant investment into the beneficiation of raw materials.”

Meanwhile, with regard to the many opportunities in the carbon space, Metmar chief financial analyst Sean Naylor said at this point there were unrealistic expectations from sellers and the company would not “hamper capital investment”.

Metmar is focused on developing assets and generating revenues related to the mining, production and trading of ores, alloys, metals, plastics, rubber and chemicals. In light of the diversity of the business, acquisitions remained a feature of the company’s growth strategy, and Ellwood said some “could” be expected before the end of the year.
 

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