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19 Jun 12 SA ‘needs chrome exchange market’

SOUTH Africa should set up a chrome exchange market to manage the supply of chrome to the global market and prices, Iraj Abedian, CEO of investment company Pan-African Capital, said on Tuesday.

This would be a model similar to Canada’s potash exchange, Mr Abedian said at a Mining for Change seminar in Johannesburg.

The world’s largest chrome deposits are found in South Africa. It is a leading supplier of ferrochrome, a key ingredient in the manufacturing of stainless steel, but its position is under threat from China, which imports about half its chrome ore from South Africa and which grew its market share to 35% last year from below 10% in 2001.

A tariff of $100 a ton of chrome ore leaving South Africa, as proposed by the ferrochrome industry, was a knee-jerk reaction and could only be a short-term measure, Mr Abedian said on Tuesday.

A vital revenue stream for platinum miners may be choked off by an export tariff of $100 a ton. Platinum mines in South Africa are already shutting down and projects are being mothballed because of high input costs and stagnant prices in an oversupplied market.

There is money to be made, however, from the chrome found in platinum miners’ discarded waste after the platinum group metals have been extracted.

Ferrochrome producers, who have invested R3,5bn a year in their businesses since 2006, argue that the Chinese growth is at their expense, as China uses South African chromite ore — a practice they want stopped.

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