JOHANNESBURG (miningweekly.com) – South Africa is continuing to export raw chrome ore to China in higher quantities and at comparatively low prices, despite government objections, Mining Weekly Online can today reveal.
China bought nearly three-million tons of chrome ore from South Africa last year and paid far less for it than what it paid for raw ore from India and Turkey, countries considerably closer to it than South Africa.
China bought the 2,9-million tons from South Africa at the comparatively low average price of $215/t including cost, insurance and freight (CIF), compared with the $360/t CIF it paid for raw ore from India - 67% more.
China also paid 35% more for the raw ore it bought from Turkey.
The large volumes going out of the country undermine the position of the local ferrochrome producers, which add considerable value to raw chrome ore, and create jobs.
Steve Phiri – the CEO of black economically empowered ferrochrome company Merafe – concedes that South Africa's current power shortage may result in even more unbeneficiated ore being sent out of the country without any value addition - a foreign-exchange and job-opportunity loss for the country.
Merafe is part of a local chrome venture with Xstrata, the world's largest ferrochrome producer, and Phiri has been campaigning for the minimising of raw chrome exports from South Africa.
He reiterates to Mining Weekly Online that the Indian government has succeeded in limiting raw ore exports through the imposition of export duties.
Statistics projected on to a large screen at Merafe's latest results presentation showed that 42,9% of the raw ore that China imports comes from South Africa - the highest single percentage. The statistics also revealed that the importation from South Africa rose 11,5% last year. China imported a total of 6,8-million tons of chrome ore in 2009.
South Africa is thus helping high-cost Chinese ferrochrome producers to compete. By contrast, exports of raw ore from India to China were down 24,7%.
Phiri foresees a likelihood of an even greater volume of raw ore being exported from South Africa, because miners will be able to argue that they are unable to beneficiate the ore because there is insufficient electricity.
"They will be compelled to do so by the circumstances in which they find themselves," he tells Mining Weekly Online.
His request to the South African government is that the raw ore exports be regulated in order to avoid the current "free-for-all" situation.
"Let's export raw ore if we have to, but let's regulate it, so that we don't kill the goose that lays the golden eggs," he adds.
Phiri assures Mining Weekly Online that Merafe is not giving up on its campaign to minimise raw ore exports and is seeking a meeting with the Department of Mineral Resources (DMR) to discuss the issue further.
"We are continually engaging the DMR and I know internally that the DMR is doing something in this regard. Unfortunately, the DMR has to deal with other departments. I cannot share with you the detail because it's still confidential, but there's progress, even though it's a bit slow.
"We're not going to give up because this is an issue of principle, as well as a commercial issue for us." Phiri adds.