Year in Review 2012: Chromite

By John Ollett
Published: Monday, 31 December 2012

Supply steady with new capacity, but South Africa problems buck trend

The past 12 months have seen a change of pace in the non-metallurgical chromite industry.

2011 saw a flurry of price increases and tighter supply with South Africa, the world’s largest chromite producer, at the forefront of this activity, as producers battled with increasing energy and logistics costs, amid a perceived supply shortage.

But 2012 saw the market stabilise, as producers settled into a more steady supply situation.

Breaking this mould early this year was German chemicals group Lanxess AG, which announced a €40m ($53m) investment in the construction of a new carbon dioxide concentration unit at its chromium chemicals plant in Newcastle, South Africa, to produce sodium dichromate for leather tanning applications.

Sodium dichromate is produced via CO2 pressure saturation, whereby sodium monochromate is converted to sodium dichromate – requiring permanent supply of highly concentrated CO2.

“This investment in South Africa marks another step within our BRICS strategy,” Rainier van Roessel, Lanxess board member, said. “It allows the best possible capacity utilisation of our Newcastle plant and sets the basis for future expansion of our production.”

Gulf Mining Group also expanded by doubling the capacity of its Oman chromite processing plant up to 30,000 tpm, CEO Kanwal Gambhir told IM in February. The plant was Oman’s first chromite processing plant when it opened in 2010 with a feed capacity of 15,000 tpm chromite.

Amcol International Corp., one of the largest producers of chromite for non-metallurgical uses, also expanded and updated its South African chromite plant

The $5m-upgrade will expand the plant, upgrade waste-stream benefication, improve quality control and improve and expand product range capability, Joe Howden, Amcol global marketing director for chromite, told IM in February. The plant will have an expanded capacity of 100,000 tpa.

The current chromite mine is an opencast mine, but the company needs to do the development work and planning for future underground mining, he added.

The Ring of Fire

The Ring of Fire chromite region in Canada is a series of new deposits being developed that could change the global supply-demand balance.

As the chromite industry is focused principally on the metallic side of the industry, it emerged this year that effectively all the chromite produced is destined for the ferrochrome industry, although some producers would consider non-metallurgical uses. No plans for this have been announced as yet.

Chinese foundries turn to chromite

Chromite demand was helped during the year as Chinese foundries started to turn to chromite sands as a replacement for costlier zircon, whose high prices have hit profits. Several small- and medium-sized Chinese foundries, particularly small-sized pump manufacturers, have widely used chromite sands of 70/140 mesh or 100/200 mesh to replace zircon.

Evaporated Pattern Casting (EPC) manufacturers have also started to import chromite to replace zircon due to the limited availability of domestic chromite. More than 80% of imports are coming from South Africa, Turkey and India, but export policies within these countries – India has already limited chromite ore exports – threaten to tighten supplies further.

While chromite has similar properties to zircon, it cannot replace the mineral in high-end precision casts for export markets. As such, chromite substitution is not expected to impact the market for zircon in these higher-quality markets.

South Africa on strike

South Africa was hit by a series of strikes during the latter half of the year. These affected chromite producers as well as miners from the country’s other large industries – platinum group metals and iron ore.

At the time, employees for various South African mining companies were on legal and illegal strikes and transport workers, such as truck drivers, were on legal strikes. The strikes slowed production at the mine level, preventing material from reaching the market.

While the strikes have mostly ended, the knock-on effects will be felt for some time. Miners in the region are making more effort to negotiate with workers to avoid such action, Rio Tinto outlined at the TZMI conference held in Hong Kong during November.

The strikes

The strikes began as a pay dispute at Impala Platinum. Violence saw 45 people, 34 of them miners, killed by police at Lonmin’s Marikana mine, the Financial Times reported.

The unrest then branched into the wider mining industry, with various transport firms going on legal strikes, leading to the disruption of fuel and product deliveries around Johannesburg.

Kumba Iron Ore, a subsidiary of Anglo American, was one of the largest companies to be caught up in the unrest, the Financial Times reported.

The company had to suspend production at Sishen, the country’s largest iron ore mine, after some 300 illegally striking workers blocked access to the pit.

It was estimated at the time that there are more than 75,000 miners caught in illegal strike action across a variety of companies including leader chromite company Samancor.

Oregon cuts production

US-based chromite producer Oregon Resources Corp. slashed chromite production at its processing plant by half towards the end of the year because of severely reduced demand.

The company is also reducing production from its mine in Oregon, US, choosing to operate on just four days per week instead of seven, local newspaper The World reported. “[The mine and plant] will reduce operating hours to match production volumes with sales volumes,” the company said.

“These decisions are never made lightly, but if we don’t take action now, potentially everyone could be unemployed,” Wayne Knott, CEO, told The World. Production at its plant, which can produce between 70,000-75,000 tpa chromite, will be increased when market conditions improve, it said.

Other market sources indicated to IM that demand in certain segments of the market was remaining strong enough to keep prices steady.