Chrome ore supply deficit ahead – Tharisa
Tharisa Minerals CEO Phoevos Pouroulis
Photo by Duane Daws
Tharisa opencast mine at Marikana, near Rustenburg
Photo by Duane Daws
Tharisa opencast mine at Marikana, near Rustenburg
Photo by Duane Daws
MARIKANA (miningweekly.com) – Platinum-group metals (PGMs) and chrome coproducer Tharisa Minerals CEO Phoevos Pouroulis is predicting a shortage of chrome ore supply in the short to medium term, driven by burgeoning stainless steel demand.
Chrome ore is fundamental to the manufacture of stainless steel, demand for which is growing by 3% to 5% a year.
Four tonnes of stainless steel require 2.5 t of chrome ore, which turns into 1 t of ferrochrome.
China currently produces and consumes more than half of the world's stainless steel and Chinese ferrochrome capacity is poised to increase by a million tonnes this year, some of it replacement tonnes as older furnaces give way to new environmentally friendlier furnaces.
"So, in the next 24 months, we see a chrome ore deficit,” Pouroulis told a local and foreign media contingent, which included Creamer Media’s Mining Weekly Online.
Speaking at the JSE-listed company’s large opencast PGM and chrome mine in Marikana, Pouroulis said that stainless steel was now a domestically driven consumable in China and was no longer export driven.
On the looming supply shortfall, Pouroulis commented: “It’s going to be quite interesting to see how the market reacts to that, and what the supply side response will be to higher prices.”
When prices hit $390/t last year, there was a strong supply-side response globally, not only from South Africa, but also from countries like Turkey, Oman, Pakistan and even Brazil, with some liquidating historical stockpiles and seizing quick entry opportunities. These are facilitated by the chrome ore market having a low barrier to entry owing to China's ability to absorb multiple grades of feedstock.
In South Africa, illegal mining in the eastern limb of the Bushveld Complex was one of the quick supply-side response, but Pouroulis pointed out that the easy, free-digging resources of a few years ago are no longer as readily available currently.
“What’s required now is real capital investment in mining operations and proper processing plants,” he said, adding that considerably more police enforcement was also helping to stifle illegal mining.
Tharisa Minerals COO Michelle Taylor spoke of $200/t being a sustainable price for metallurgical grade chrome.
But just as Tharisa has a basket of PGM metals, it also has a basket of chrome commodities, made up of 75% metallurgical chrome and 25% specialty grade chrome, which attracts at least $50/t more than the metallurgical grade product.
Tharisa also produces a foundry grade chrome concentrate, which also attracts a healthy premium; current pricing is $600/t, up on last year’s $500/t to $550/t.
Importantly, Tharisa has changed its product mix to produce more specialty grade concentrate.
As Taylor pointed out at last year’s Chromium 2017 in Johannesburg, South Africa is an irreplaceable global supplier of chrome ore and ferrochrome, which is, in turn, an irreplaceable component of China-dominated stainless steel production.
South Africa, as the dominant global chrome producer, in 2016 delivered half of the world’s production of chrome ore.
South Africa then used half of the chrome it produced as feedstock for domestic ferrochrome production and exported the remaining 8.5-million tonnes, overwhelmingly to China.
Seventy-three per cent of China’s chrome imports come from South Africa’s chrome-mining industry, which employs 17 500 people who receive R4.2-billion a year in salaries and wages.
However, in ferrochrome, South Africa has been forced, through mainly negative power factors, to cede its one-time No 1 global position to China, which in 2016 produced 43% of world ferrochrome output compared with South Africa’s 33% of world output.
Comments
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation