Chrome concentrate is used in the production of ferrochrome.
Ferrochrome is an integral raw material for stainless and other high-value added steels. It is added to stainless steel for its corrosion and oxidation resistance properties and to alloy steels to improve hardness and toughness. Stainless steel typically contains between 10% to 30% chromium and there are no direct substitutes for ferrochrome in the production of stainless steel.
A distinction should be drawn between the two types of ferrochrome produced. Ferrochrome made from South African chrome concentrate, such as that produced from the Tharisa Mine, is called charge chrome, meaning that it benefits from having a large proportion of ‘free’ high purity iron units and a high silicon content. These qualities are not found in the second type of ferrochrome, high-carbon ferrochrome, which is the common form produced from chrome concentrate elsewhere in the world. The chemical composition of charge chrome reduces the stainless steel manufacturers’ need for charging the furnace with ferro-silicon, thereby reducing their production costs. As a result, the chrome concentrate produced in South Africa is the preferred alloying element among stainless steel producers. The ferrochrome to be produced by Tharisa Fujian Industrial is intended to be charge chrome.
The chrome market
As Tharisa Mine is the largest known single chrome resource deposit in the world, the Group is well positioned to benefit from the projected growth in demand for chrome, which is primarily used in stainless steel manufacturing.
Heinz Pariser, an independent expert on the chrome sector, believes that the sector’s outlook is positive, with approximately 80% of global exports expected to reach China. Demand for chrome ore and chrome concentrate arises largely from the ferroalloy industry, with the primary demand driver being the production of ferrochrome for use in stainless steel. Ferrochrome is added to stainless steel for its corrosion- and oxidation-resistance properties and to alloy steels to improve hardenability and toughness; there is currently no known substitute for these products. In 2010, stainless steels accounted for more than 70% of chromium usage as measured by chrome content. Accordingly, the chrome ore and chrome concentrate markets (through the ferrochrome market) continue to benefit from the significant growth of the stainless steel market, primarily in China, the world’s largest producer and consumer of stainless steel. According to Heinz Pariser, the Chinese stainless steel market grew at an average rate of 36% per year over the last decade and is expected to grow at a compound annual growth rate of 10.2% through to 2016. Heinz Pariser also forecasts a compound annual growth rate of global ferrochrome demand of 6.6% through to 2016.