Local Beneficiation of South African Chromium Ore Opportunity?

Local Beneficiation of South African Chromium Ore Opportunity?

Most African countries export the bulk of their raw minerals commodities to overseas markets, predominantly to China. This deprives most African economies of the numerous economic and social benefits that come with the local processing and exporting of value-added products. A case in point is South Africa’s chromium ore industry. South Africa is the largest producers of chromium ore in the world and not surprisingly is also the biggest exporter of raw chrome ore to international markets.

Whilst South Africa is the world's biggest producer of chromium ore (the raw material for the production of ferrochrome), when it comes to the global beneficiation China accounts for almost 50% of ferrochrome production, whereas South Africa is responsible for no more than 20%. Notwithstanding such a huge mineral reserve base, Africa faces a number of challenges that make it less competitive when it comes to the production of value-added products:

1.    Energy
One of the biggest problems that the South African ferrochrome industry, and indeed most other African industries face, is the lack of adequate and stable power supply. This problem is forecast to persist for the foreseeable future.

2.    Cost of Production
Compared to other countries like Finland and China, South African ferrochrome producers face very high production costs. The energy tariffs in South Africa and most other African countries make energy the biggest cost driver for local ferrochrome producers.

3.    International Ferrochrome Price
Despite having the bulk of the minerals deposits, African countries are price takers. In South Africa most smelters are planning to shut down some facilities as they are struggling to remain operational at current prices.

In 2004 the exports of chrome ore from South Africa to China were only 100 000 tons. By 2024 South Africa exports to China had increased exponentially and currently account for 17.8 million tons of the total 21.8 million tons imported by China globally. Until the unfavourable conditions for local value addition in most African nation economies are addressed, it is most likely that the bulk of the beneficiation will continue to happen offshore.