The Sunday Mail
Ishemunyoro Chingwere
Business Reporter
A LARGELY gloomy global chrome and chromium sector outlook, that has the potential to push producers out of business, could spur Government’s call for value addition as opposed to raw chrome exports as players seek to capitalise on value chain profits to stay afloat.
This came out at a stakeholders’ consultative conference held in Harare last Wednesday under the auspices of State minerals marketing arm, the Minerals and Marketing Corporation of Zimbabwe (MCZ).
Global market watchers have forecast a gloomy 2019 for the chrome industry and its value chain. They suggest the trend could continue into 2020.
With 12 percent of global chrome deposits, Zimbabwe holds the second largest chrome reserves in the world after South Africa and the mineral is expected to play a key role towards the attainment of US$12 billion a year exports envisaged from 2023 going forward.
However, a new threat has emerged as prices for both chrome ore and ferrochrome, which are largely determined by the world’s biggest consumer — China — have plummeted to 2014 levels, a period which saw some firms closing down.
The situation is not being helped by trade wars between America and China and the growing trend of using scrap metal, particularly in Europe and the United States in the production of stainless steel as a substitute for virgin ferrochrome.
Chrome producers, most of whom have previously relied on the export of the otherwise less lucrative concentrates and lumpy chromes, spoke passionately about the increasingly less and less returns they are getting.
Although the sector has several other problems like foreign currency retention, weigh bridges, logistics, mine disputes and predatory chrome buying, the miners largely pointed to subdued export and consequently domestic pricing.
In an interview on the sidelines of the conference, Mines and Mining Development Deputy Minister Polite Kambamura said the solution is in following every dollar of profit that is available in the value chain as opposed to exporting chrome ore.
The deputy minister also noted that it was encouraging that some players had already heeded to the beneficiation call and had set up smelters to capitalise on every dollar.
“Some players in the industry have already set up smelters, players like Afrochine and Zimasco have already led the way by commissioning smelters to beneficiate chrome into ferrochrome,” said Deputy Minister Kambamura.
“(Government is) calling on other players to follow suit and set up smelters so that we beneficiate our minerals for the export market,” he said.
Despite being endowed with vast chrome resources; Zimbabwe currently produces just about three percent of global ferrochrome.
Government has this year set producers a target of 418 000 tonnes for ferrochrome exports, a figure that signifies a 20 percent jump from last year.
Speaking at the same conference, Confederation of Ferrochrome Producers of Zimbabwe (CFPZ), Mr John Musekiwa who is also chief executive officer for one of the country’s largest smelters — Zimasco — warned the global outlook could push Zimbabwe out of business if less remunerating ore exports continue.
Mr Musekiwa also noted that the cost of mining is also set to go up as easy to mine deposit continue to deplete.
“Of the chrome mines, approximately 50 percent is utilised for the production of ferrochrome, and half of it is being beneficiated to chrome concentrate for export or exported as lumpy ore.
“Due to uncertain global economic conditions, largely the trade wars between the USA and China the market is expected to be weak for the rest of 2019.
Already quarter on quarter the prices for ferrochrome came down by 13,3 percent . . . and this weakness is expected to carry on into 2020.
“In the next five years, we are expecting to have the ferrochrome reaching about 1 million (tonnes) by 2022 which is an increase from approximately 365 000 tonnes which we produced in 2018,” said Mr Musekiwa.
He also noted that for this to be attained, the country’s 14 ferrochrome operations will need to overcome some of their lingering drawbacks, among them high cost of production due to inefficient smelting technologies which need replacement with modern ones.
Miners, he said, also need to invest and address the low ore supply which will in turn spur investment in beneficiation.
MMCZ general manager Mr Tongai Muzenda said the state minerals marketer was concerned miners were not getting as much as they should for their produce.
“We want to maximise mineral returns to the individual mining houses, which I know is not happening especially to the small scale miners,” said Mr Muzenda.
“So there has to be a discussion on what we need to do to achieve this and add value,” he said.
