The Minerals Marketing Corporation of Zimbabwe (MMCZ) has indicated that local chrome ore producers might not achieve the projected 2017 export target of $300-million, owing to the commodity’s falling price and the flooding of the traditionally lucrative Chinese market with cheap-quality material from South Africa.
Speaking on the sidelines of a Midlands regional chrome mining indaba, MMCZ deputy general marketing manager Masimba Chandavengerwa said the chrome ore price had dropped from about $200/t in March to about $90/t, owing the stockpilling of ore totalling about two-millions tons by dealers in China.
The Asian giant remains the top consumer of chrome and chrome-based products.
Chandavengerwa said Zimbabwe producers would, for the next six months, struggle to sell their high-quality chrome ore in China, owing to a massive influx of cheap, low-quality South African ore.
“Until such a time that the stockpiles have been depleted, you can’t expect prices to firm up. We expect the market, and the prices, to start stabilising in five to six months,” he said.
With the chrome ore price currently pegged at an average of $90/t, international buyers were not prepared to commit themselves because they expected the price of the commodity to continue falling over the next six months, Chandavengerwa added.
The current state of the chrome ore market had created a new predicament for Zimbabwe’s small-scale miners, who have no money, equipment, storage facilities and the technical expertise required to preserve the accumulating stockpiles.
However, Chandavengerwa said, most of the miners had told the MMCZ that they would not be entering into any new sales deals until the market stabilised.
To assist the producers, the MMCZ had appealed to government for a $10-million loan to buy up all the chrome ore held by the miners and stockpile it for export when the commodity’s market and prices stabilised.
In January, Zimbabwe’s chrome exports peaked at $28-million, up from the first record postcrisis chrome ore export earnings of $7-million recorded in January 2015.
In 2016, the National Treasury earned $30-million from chrome ore exports, equivalent to 1% of the country’s total mineral export earnings.
Zimbabwe holds the world’s second-largest chrome ore reserves after South Africa.