Chromite conundrum: how to bring demand back into an abating market

Political turmoil in South Africa has impacted the chromite mining industry in recent years, with several chrome ore producers, including Lanxess and Glencore Xstrata, experiencing operations disruption.

Recently, however, the chromite mining industry has shown signs of stabilisation and slow expansion began in the second half of 2013.

Consultancy group Heinz H Pariser Steel & Metal Alloys indicates that global consumption of chromite exceeded 30m tonnes in 2012. In terms of global chrome ore production, the International Chromium Development Association (ICDA) estimates that in Q1 2013, numbers dropped by 5% quarter-on-quarter (q-o-q) and consumption reduced by only 1%, helping the markets to stabilise after the oversupply of 2012.

Chromite grades

Chromite mineral contains iron and chromium oxides (FeO and Cr₂O₃) with Cr/Fe ratios, ranging from 1.5 up to 3. In its pure form chromite contains 68% Cr₂O₃ and 32% FeO.

The US Geological Survey (USGS) distinguishes three chromite grades: metallurgical grade, with 46% Cr₂O₃ and Cr/Fe ratio greater than 2, chemical grade, with 40% - 46% Cr₂O₃ and Cr/Fe ratio between 1.5 and 2, and refractory grade chromite, with 30% - 57% Cr₂O₃, 27% alumina (Al₂O₃).

A fourth grade, with more than 46% Cr₂O₃ and no more than 27% FeO content, is known as foundry grade and is used in the metal casting industry.

According to the USGS, the chromite market in 2012 was slow, with “escalating production cost and dismal demand”, on the back of a slowdown in ferrochrome production. Among the causes of this slowdown was the reduced demand in stainless steel in Europe and China, the USGS added.

ICDA figures confirm USGS data, estimating global chromite production in 2012 to be around 24.7m tonnes, down 1.5% from figures seen in 2011.

Chinese chromite imports decreased from 9.4m tonnes in 2011 to 9.3m tonnes in 2012. One reason for the Chinese downturn was the use of chromite stocks, which had increasingly accumulated in the previous years, as a consequence of an oversupply in the international markets.

In 2013, China became the top producer of ferrochrome worldwide, surpassing the longstanding leadership of South Africa.

However, China will always depend on imports of chromite, and the trend of chromite consumption in China will increase up to 15m tonnes in 2015 and will reach 20m tonnes by 2020, according to Roskill predictions.

SUPPLY SECURITY

USGS figures show global chromite resources to be greater than 12bn tonnes. The majority of chromite resources are concentrated in South Africa, which owns about 75% of world’s reserves, with Pariser’s estimates of shipping-grade chromite amounting to 6.8bn tonnes.

Zimbabwe, Kazakhstan, Turkey and Finland hold chromite resources between 100m and 1bn tonnes, while Canada’s recent explorations of its Ring of Fire’s deposits amount to 200m tonnes of reserves.

Countries with reserves less than 100m tonnes include India, Greenland, Iran and Brazil. Other small chromite reserves can be found in Albania, Greece, Russia, UAE, Oman, Pakistan, Afghanistan, China, Vietnam, Philippines, Indonesia, Australia, Madagascar and Cuba (see Fig.1).

Information compiled by Pariser indicates a steady growth rate of 6% in global chromite supply between 2003 and 2012, with tonnages increasing from 16.3m tonnes in 2003 to 28.8m in 2012. However, supply fell by about 14% in 2009 to approximately 22.5m tonnes owing to the global economic crisis; in 2011 and 2012 figures stabilised to around 28.8m-29m tonnes.

South Africa is by far the largest producer of chromite ore and concentrates, accounting for 41% of global production in 2012, followed by Kazakhstan (14.8%), India (13.5%) and Turkey (9.6%).

Russia (2.7%), Oman (2.4%), Brazil (2.4%) and Pakistan (2.3%) are other important producers. In Europe, Finland and Albania are the major producing countries.

According to ICDA, total chromite production in 2012 reached 24.8m tonnes, down 0.95% from 2011, as an oversupply situation, caused by the inability of consumption to keep up with production, occurred.

Between 2003 and 2012, China showed a growth rate of about 20.5% in chromite consumption, followed by India (9%), Russia (4%), South Africa (2%) and Kazakhstan (less than 1%).

South Africa

Chromite in South Africa is sourced in the Bushweld Complex, which covers an area of 65,000km² and hosts nearly 70% of estimated chromite reserves in the world. The chromite-rich resources are mainly located in the low group (LG) and middle group (MG).

However, the upper group 2 (UG2) can generate a huge amount of chromite from the tailings of the platinum group minerals (PMG) mining activities. ICDA reports that South African UG2 concentrator capacity reached 4.7m tonnes in 2012, up 34.6% compared with 2011.

According to Pariser, the average grade of South African chromite is 34.8% Cr₂O₃, with six deposits grading between 40% and 50% Cr₂O₃, 10 deposits grading between 30% and 40% Cr₂O₃, and four resources grading below 30% Cr₂O₃.

According to the USGS, chromite production in South Africa amounted to 11m tonnes in 2012, up 7.8% year-on-year (y-o-y).

However, ICDA indicates South African production of chromite ore and concentrates in 2012 being just over 10.1m tonnes, down 2.9% compared to 2011 and accounting for about 41% of the world’s production.

According to ICDA, chromite production in Q1 2013 was down 4.7% compared with Q4 2012.

Partial stagnation in the production from South Africa was due to the unrest and demonstrations, which affected operations at several mining companies.

High costs of electricity power and global overcapacity also contributed to the slowdown in chromite production during 2012 and beginning 2013.

However, production in South Africa was up almost 22% q-o-q in Q2 2013, accounting for 49% of the global output in Q2 2013.

Among the major chromite producers in South Africa are Merafe Resources, with a joint venture (JV) with Anglos-Swiss multinational Glencore Xstrata, Samancor Chrome, UK-based Lonmin, Assmang, Xstrata’s subsidiary Rand York Minerals, and German multinational Lanxess.

Besides metallurgical grade chromite, several companies produce foundry grade, refractory grade and chemical grade chromite, such as Assmang, Rand York, Samancor, Lanxess, and Veereniging Refractories.

South Africa produces more chromite than it consumes, with about 4.6m tonnes out of over 10m tonnes of chromite used in the domestic market in 2012, according to ICDA. The nation is therefore the largest exporter of chromite worldwide with exports reaching 5.5m tonnes in 2012, up by 3% compared with those in 2011.

However, South Africa’s exports to China in 2012 amounted to 4m tonnes, down by about 4% compared with 2011, according to ICDA.

Although South Africa remains the largest exporting country to China, the lower exports in 2012 are due to China using up stockpiles accumulated in prior years.

According to ICDA’s 2012 estimates, South Africa exported 495,000 tonnes chromite to Western Europe and Turkey, up by about 69% y-o-y. 277,000 tonnes was exported to the US, up by 45% y-o-y, 68,000 tonnes to South America, down by 13% y-o-y, and 61,200 tonnes to India, down by 11% y-o-y.

However, Pariser’s figures indicate South African exports to South America and India were as high as 95,000 tonnes and 84,000 tonnes, respectively.

Finally, beneficiation of the UG2 tailings provides South Africa with additional capacity from 3m to 5m tonnes of chromite ore and concentrate, which is efficiently recovered from waste generated in the platinum production process and less costly than mining from the LG.

However, the South African Department of Mineral Resources has begun considering stricter regulations, especially in the UG2 chromite production, while the South African government is re-discussing a bill, which aimed at greater national ownership of mining projects and restricting exports.

Kazakhstan and Russia

Kazakhstan hosts the world’s second-largest reserves of chromite, the majority of which are located in the Kempirsai Massif district, north-west of the country. Kazakhstan was the second largest producer of chromite in Q2 2013, which, together with Oman, Iran, Russia and Albania, represented 21% of the world’s output.

Total production in 2012 amounted to almost 3.7m tonnes, which is on a par with the figures seen in 2011. The majority of this chromite supplies the domestic demand in the production of ferrochrome for metallurgical applications.

Exports in 2012 amounted to approximately 861,000 tonnes, down 3% compared with 2011 figures. The exports were mainly to Russia (90%) and China (10%).

According to ICDA, the country expanded production in Q2 2013.

The two main producers in the country are Eurasian Natural Resources Corp. (ENRC), which operates via its subsidiary Kazchrome, and Oriel Resources Ltd, which is owned by the Russian company Mechel.

Russia is also an important chromite producer, with an output of about 660,000 tonnes in 2012, up 4% compared with 2011.

However, Russia is a major importer, with imports amounting to 899,000 tonnes in 2012, according to ICDA. Almost all chromite is imported from Kazakhstan (86%), with other imports from Turkey (7.5%) and South Africa (6.4%).

India and Pakistan

India hosts 203m tonnes chromite, including 54m tonnes of reserves and 149m tonnes of remaining resources, according to the Indian Bureau of Mines (IBM).

The majority of resources (93%) are located in the state of Odisha, mainly in the Sukinda valley in Cuttack and Jajpur districts.

Metallurgical-grade chromite accounts for 55% of the resources, while the beneficial grade accounts for 17% and refractory grade for 5%. Other low and unclassified grades account for 23% of the remaining resources.

IBM figures indicate that there are in total 20 chromite mines in the country, seven of which account for 88% of total production, with a capacity of more than 100,000 tpa each.

Tata Steel, Orissa Industries, Bhilai Refractories, Associated Ceramics and Joglekar Refractories and Ceramics are the major producers of refractory grade chromite in this region.

Other refractory, foundry and chemical grade chromite producers are Odisha Mining Corp and Misrilall Jain Group.

The country is the third-largest producer of chromite worldwide, accounting for 13% of global production.

Production in 2012 amounted to about 3.4m tonnes, up 18% y-o-y. India’s supply is mainly for the domestic metallurgical and chemical industry.

Figures from ICDA show that chromite consumption in Q2 2013 rose to about 6.6m tonnes worldwide, up by 19% q-o-q and up by 6.4% y-o-y.

The country exports chromite to China, Japan, and Europe, in minimal amount. Exports in 2012 amounted to about 329,000 tonnes, down by 31% y-o-y.

According to the IBM, imports increased in the period 2011-2012, reaching 136,000 tonnes, mainly from South Africa (37%), Turkey (30%) and Oman (29%). According to ICDA, imports were up by 94% y-o-y in 2012, totalling 203,301 tonnes.

Turkey

Turkey is the fourth-largest producer of chromite, with concentrates grading 48% Cr₂O₃ and Cr/Fe ratio ranges between 2.4 and 2.8, while lumps containing 34%-44% Cr₂O₃ , with Cr/Fe ratio of 2.5.

ICDA estimates indicate that Turkish production amounted to about 2.4m tonnes in 2012, down by 6% y-o-y.

Exports reached 2.2m tonnes in 2012, up 14% compared with 2011, mainly to China (84%), Europe (11%), Russia (3%) and India (1%). Exports in Q1 2013 amounted to 497,000 tonnes, up 42.2% q-o-q.

Imports were low, however, at around 162,000 tonnes in 2012, up by 32% y-o-y, mainly from South Africa.

According to ICDA, the Turkish chromite mining sector is fragmented, with the top 10 producers controlling about 50% of the capacity, which could supply demand.

Main producers include Dedeman Mining and Akmetal Madencilik (AKM).

Recent technical developments have allowed Turkish producers to increase the annual capacity through the beneficiation of low-grade lumps.

“If in the past it was not feasible to produce chrome with a grade less than 45%, now we can earn a good profit with 6.5% run-off mine ore,” Murat Eroglu, Dedeman’s deputy chairman, told E&MJ in 2012.

Oman

Oman’s chromite production has fallen in the last two years from almost 920,000 tonnes in 2010 to 590,000 tonnes in 2012.

The majority of chromite is produced in the form of lumpy ores, with chromite content between 24% and 38% and Cr/Fe ratio between 2 and 2.4.

Oman’s chromite is particularly suitable for refractory applications, owing to its high aluminium content.

Exports in 2012 amounted to about 540,000 tonnes, of which about 426,000 tonnes went to China, and over 108,000 tonnes to India.

The two main producers are Gulf Mining Group (GMM) and Muscat Overseas.

MARKET DEMAND

The main application of chromite is in the stainless steel industry and in the production of ferrochrome, which both account for the 95% of the consumption worldwide.

Chromite in the refractory industry

For industrial minerals uses, however, chromite is used by the refractory industry for the production of chromite, magnesia-chromite, also called mag-chrome, periclase-chrome, and picrochromite bricks.

Refractory bricks are used in furnaces of ferrous and non-ferrous metallurgy, as well as in cement and glass kilns, owing to high temperature resistance, high chemical stability, and resistance to corrosion.

The production of chromite bricks in the refractory industry has steadily decreased, from over 600,000 tpa in the 1970s to 125,000 tpa by the end of the 1990s.

Major causes of this steady decline are the introduction of hydrometallurgical processes in non-ferrous metallurgy, the move from open furnaces to basic oxygen and electric furnaces, and the problem of hexavalent chromium generation in cement kilns.

However, the use of refractory grade chromite worldwide increased from 259,000 tonnes in 2003 to 392,000 tonnes in 2012, with a 2.8% growth rate, according to Pariser.

ICDA figures show that the global production of refractory grade chromite amounted to about 162,000 tonnes in 2012, down by 12% y-o-y, but up by 16% compared to 2010 (see Fig.2).

According to ICDA, refractory grade chromite production worldwide amounted to 23,000 tonnes in Q2 2013, up by 31% q-o-q, representing 0.3% of global chromite production.

South Africa, India and Oman are the major suppliers of refractory grade chromite.

Data from the IBM show that refractory grade chromite consumption in India was about 25,800 tonnes in the period 2011-2012, down by 42% y-o-y.

According to ICDA, mag-chrome bricks are still used in steelmaking ladles, in argon-oxygen de-carburisers and in tap-hole plugging.

Their use in the European and North American cement industry, which accounts for 7% of total consumption, has virtually disappeared due to stringent regulations as well as the high cost of disposing used bricks, which contain hexavalent chromium, a proven carcinogen.

“The largest volume of chrome-containing materials is consumed by ferrous metallurgy, followed by non-ferrous and cement industries,” Sergey Odegov, CEO at Russian refractory industry, Magnezit Group, told IM.

Data from the European Refractories Producers Federation (PRE) indicate that total production of refractory bricks in Europe amounted to 4.1m tonnes, with total consumption of 3.7m tonnes in 2010. The steel industry accounted for almost 61% of the consumption, followed by the cement industry (14%), ferrous (4.8%), non-ferrous (3.3%) and glass (2.8%).

Estimates show refractory brick production amounting to about 4.3m tonnes in 2011 and just under 4m tonnes in 2012.

Odegov said that Magnezit bought 35,500 tonnes of refractory grade chromite ore from South Africa in 2012 and 37,500 tonnes in 2013.

Speaking about Magnezit Group’s production in 2012-2013, Odegov told IM that “due to considerable reduction of steel melting in open-hearth shops, sales volume of periclase-chrome materials lowered by 14%.”

“Sales volumes of chrome-magnesia bricks remained at the same level thanks to major deliveries to the non-ferrous industry,” he added.

Odegov said that Magnezit’s main market is the commonwealth of independent states (CIS), but that other potentially interesting markets include the US, Europe, Brazil and China.

According to Odegov, the company is planning to deliver novel high-quality refractory materials and chrome-free materials to the cement industry.

Chromite in the foundry industry

Chromite sand has important applications in foundry industry, for metal casting, owing to its high melting temperatures, low wettability, and dimensional stability in response to heat.

According to Roskill, less than 60% of the mined chromite is recovered as foundry grade chromite, which has begun to replace zircon in foundry applications.

Pariser’s data indicate an increase in the global consumption of chromite sand in the foundry industry from 465,000 tonnes in 2003 to 927,000 tonnes in 2012.

Estimates from ICDA indicate that foundry grade chromite production amounted to 666,000 tonnes in 2012, down by 13% y-o-y. However, production in 2011 exceeded the levels before the global economic crisis, reaching about 766,000 tonnes (see Fig.2).

ICDA’s figures show that global production of foundry chromite sand reached almost 163,000 tonnes in Q2 2013, up by 63% q-o-q, representing 2% of total chromite production.

Production is mostly from South Africa, but, according to ICDA, Chinese producers reportedly transform small quantities of imported metallurgical grade chromite into foundry sand.

John Papp, USGS mineral commodity specialist, told IM that one company, Oregon Resources Corp. (ORC), produces foundry grade chromite in the US, from its mine near the city of Coos Bay, in south west Oregon.

“The demand for foundry and refractory grade chromite between 2011 and 2012 is exceeded by supply,” Brent Beachy, business director at AMCOL Metalcasting, told IM.

“However the quality and the consistency of lower group 6 mined ore bodies from South Africa has been limited due to site specific closures,” he added.

Beachy told IM that AMCOL Metalcasting produced about 100,000 tonnes of foundry grade chromite during the period between 2011 and 2013.

“The consumption of foundry sand worldwide has shown low growth in the years 2011-2013,” Beachy told IM.

He added that the largest demand growth came from China, to fulfil demand from the ferrochrome industry.

China is the world’s leading producer in the metal casting industry, with an output of 41.2m tonnes in 2011 (see Fig.3), exceeding its pre-recession level and representing 42% of the world’s production, according to the 46^th annual Modern Casting Census of World Casting Production.

According to the China Foundry Association (CFA), China’s average output experienced an average annual growth rate of 11% in the last 12 years.

The metal casting industry mainly supplies the domestic markets with exports accounting for 5% of the total output, while imports amounted to less than 1% of the total production.

The Chinese foundry industry is facing a decline in the domestic and international markets, owing to the increase of foundry materials’ price and pressure from environmental regulations, according to CFA.

Despite this, CFA forecasts a 6% increase of castings production in the next five years, with an expected output of 50m tonnes by the end of 2015.

The metal casting industry also gave signs of a rebound in the US, with 10% growth in production in 2011, amounting to 10m tonnes.

The country was closely followed by India, which saw 9.9m tonnes of production, and Japan and Germany, both with a production of about 5.5m tonnes.

Chromite in the chemical industry

Chemical grade chromite is used to make sodium dichromate, which is an important intermediate for the production of chromium sulphate, used in the leather tanning industry, and chromic acid, for the electroplating and wood preservation industry.

India-based Vishnu Chemicals is one of the main producers of sodium dichromate, with a reported production capacity of 70,000 tpa, according to the IBM.

Chromium oxide is also used in the pigments industry for the production of green and yellow colours, but its use has been gradually substituted by other products, owing to the generation of hexavalent chromium.

The leather tanning and electroplating industries are the main users of the chrome-based chemicals, accounting for 37% and 20% of the chemicals end-market, respectively.

According to Pariser, chemical grade chromite consumption increased from 953,000 tonnes in 2003 to almost 1.7m tonnes in 2012, at a 3.9% growth rate.

Global production of chemical grade chromite amounted to about 571,000 tonnes in 2012, according to ICDA. This was approximately half of the amount produced in 2011 (see Fig.2).

During Q2 2013 chemical grade production was about 164,000 tonnes, up 64% q-o-q, representing 2% of total chromite production. The majority of chemical grade production was in South Africa.

According to the IBM, the consumption of chemical grade chromite in India was about 6,500 tonnes between 2011 and 2012.

China held the highest share in the global basic chromium sulphate market, with a 22% use, followed by South America (21%), Europe (19%), Asia Pacific (14%), India (12%), North America (9%) and the Middle East (5%), according to figures reported by the Turkish chemicals manufacturer, Soda Sanayii (see Fig.3).

According to the consultancy firm Asian Agribusiness Consultancy (AAC), China’s domestic hide and leather production has steadily increased from 2005, with values of up to $193bn in 2013, and projections reaching $278bn by 2015.

AAC also highlighted the increased consumption value of hide and leather in China, amounting to $97bn in 2013. This is expected to rise further to $124bn by 2015.

Imports of tanned leather in 2011 amounted to about 800,000 tonnes, 700,000 tonnes of which is attributed to tanned bovine leather without fur.

A major European chemicals producer told IM that annual consumption of chromium sulphate in the Italian leather tanning industry is stable at about 20m tpa 2013.

Italy is one of the main producers of leather tannery, accounting for about 65% of the European market, followed by Spain (10%), Germany (4%) and Portugal (4%).

The majority of the products are exported to Europe, in particular France and Germany, which account for the 65%-70% of the exports.

The US also has an important leather tanning industry, with chrome tanning accounting for 90% of the country’s tanning production.

USGS 2011 statistics indicated that chromium chemical imports amounted to about 10,200 tonnes, including chromium trioxides, chromic acid, sodium dichromate, chromium sulphates, chromate salts and chrome yellow for pigments.

According to a major European chemicals producer, there is no visible expansion of the leather tanning market, not even in China, as stricter environmental regulations have put pressure on several Chinese leather producers, with consequent inhibition of growth in demand during 2013.

The electroplating industry is another important end-use market, consuming around 80% of the chromic acid produced worldwide.

According to Soda Sanayii (see Fig.3), China holds a 50% share of the chromic acid market, followed by North America (13%), Europe (12%), Pacific Asia (8%), India (4%), Japan (5%) and Middle East (3%).

Chinese consultancy group, Huidian Research, indicates that the supply of plastic electroplating in China amounted to about 235m m² in 2012, up 19% compared with 2011 figures.

Huidian says that the Chinese electroplating industry showed an upward trend from 2009 to 2012, with a 20% annual growth rate. The industry is very fragmented, however, with tens of thousands of enterprises.

A recent report by the Global Industry Analysts (GIA) consultancy group shows that electroplating market has gone through a continuous downward trend in the recent years, owing to several reasons, including the growing popularity of nickel-plating, the economic recession and increasing environmental regulations, especially in Europe and North America.

Consequently, the electroplating market is shifting from being traditionally dominated by the US and Europe to the Asia-Pacific region. This is due to an increase in demand for consumer goods from developing economies in this region.

However, Tim Peddington, editor of Products Finishing journal, says that economists expect future growth in the metal finishing sector, forecasting a 3.2% annual growth rate through 2015.

PRICE TRENDS

Prices of chrome ore vary according to grades, forms and countries of provenience.

According to the USGS, the average price of imported chromite in the US increased from $212/tonne in 2010 to $355/tonne in 2011 and $435/tonne in 2012.

Prices for Turkish chromite concentrate, 44%-48% Cr₂O₃, was about $300/tonne, while for Turkish chromite lump, 40%-42% Cr₂O₃, was $280/tonne, as reported by E&MJ publication in 2012.

A Mining-Bulletin report indicated a price of $255/tonne for Turkish chromite lump, 40%-42% Cr₂O₃, as of May 2013.

Shipments by container from Turkish ports to China cost $25-35/tonne, depending on loading port and destination, but freight costs from Pakistan can be lower than $10/tonne.

Mining-Bulletin data indicate a price of $175/tonne for South African chromite concentrate, 42-44% Cr₂O₃, as of May 2013.

Asian Metal market reports a price of $120/tonne for South African 30-32 % lumpy chrome, and a price of $170/tonne for South African chromite concentrate, grading 42%-44% Cr₂O₃, Cr/Fe ratio of 1.5, CIF China.

Low-grade South African chromite ores, 26%-28% Cr₂O₃, are priced $100/tonne, according to the Asian Metal market.

According to IM pricing data, the price for foundry grade chromite, 47% Cr₂O₃, amounts to $540-580/tonne, which is higher than the price of metallurgical chromite, owing to the competition with zircon.

The price for chemical grade chromite, 46% Cr₂O₃, was $400/tonne, while refractory grade chromite, 46% Cr₂O₃, was priced about $480/tonne, hitting $600-700/tonne in 2012.

According to the FerroAlloys market service, China imported chromite lumps, 40%-42% Cr₂O₃, from Turkey at the price of $270/tonne, Pakistan’s lumps, 36%-38% Cr₂O₃, at $260/tonne and Oman’s lumps at $190-200/tonne.

Metal-Pages’ price for chromite ore, 42% Cr₂O₃, at CIF China, stood at $283/tonne in January 2014, while chromite ore 44% Cr₂O₃, at CIF China, was set at $173/tonne.

According to the IBM, the average price of Indian chromite ore amounted to rupees (Rs) Rs 7,046/tonne ($112.7/tonne*) during the period 2011-2012.

The price was calculated from the value of the total production of chromite ore, including chromite 52% Cr₂O₃ , 40%-52% Cr₂O₃ , and lower than 40% Cr₂O₃ grades.

The average price of exported chromite to China during the year 2011-2012 was Rs 21,859/tonne ($350/tonne); Rs 34,996/tonne ($560/tonne) for lumps and Rs 16,123/tonne ($258/tonne) for concentrates.

India also imported chromite from South Africa at a price of Rs 17,360/tonne ($278/tonne), from Turkey at a price of Rs 16,109/tonne ($258/tonne) and from Oman, at a price of Rs 9,920/tonne ($159/tonne).

The prices were estimated by the ratio of the value and quantity of imports reported by the IBM.

According to KPMG, Deutsche Bank expects prices for metallurgical chromite to be $240/tonne in 2013 with a slight increase to $243/tonne in 2014, stabilising to around $230/tonne in the long term.

MARKET OUTLOOK

According to KPMG, global stainless steel consumption has increased at a growth rate of 4.4% over the last five years and it is expected to grow further, at a rate of 4.8%.

China and the Asia-Pacific region have driven the growth in consumption, with China’s growth rate at 6.1% and the rate of the other Asian countries expected to reach 4%. This growth will drive chromite demand.

According to ICDA, explorations of new resources in Canada and Australia, advantageous logistics facilities in Oman and Iran, and possible restrictions of chromite exports in South Africa, might lead to a future diversification of chromite exporters to China.

Kazakhstan will mainly produce for the expanding domestic market and partial exports to Russia, while India is restricting exports.

According to KPMG, “the chromite market is expected to remain in balance in the years to come,” with the new projects capacity and the increasing supply being only sufficient to meet the increase in demand.

Regarding non-metallurgical grade chromite, the rebound of the metal casting industry, which is expected to grow further in the short term, will drive the demand of foundry grade chromite sand, especially towards the markets in the Asia-Pacific region.

For the refractory industry, Odegov thinks that in future there will be demand for higher quality grades of refractory chromite, while the cement industry will progressively transfer to chrome-free materials.

Speaking about the refractory industry worldwide, Odegov told IM: “We forecast that in the steel-making sector there will be lowering of demand at the level of 2-3% annually.”

“An unstable situation is expected on the market in 2014-2015, but my opinion is that due to predicted growth in the steel-making sector, the refractory industry will also have a positive trend for growth,” he added.

More stringent environmental regulations and the replacement of new products in the leather tanning, electroplating and pigments sectors are likely to hamper the demand of chemical grade and chromite in the near future.

However, the key factor will still be the horse-like galloping Chinese economy, which dominates all the end-markets of non-metallurgical grade chromite.

*Conversions made January 2014