CHROMITES WORLD MARKET REVIEW

Kazakhstan has the second place in the world on chromic ore extraction after the republic of South Africa. However the quality of Kazakhstan ore is higher. There are almost no chromic ores reserves in the rest of CIS territory. All chromic ore of Kazakhstan is located in Aktyubinsk oblast and a large pool of ore located in Kempirsaisk massif (about 300 million tons) which extracts Donskoi ore-dressing factory of transnational company "Kazchrom". On volume of manufacture and sale of chromic production the company is one of the largest in the world market after South Africa giants Samankor and Xstrata.

Chromites are unique raw material for reception ferrochrome which is used at melt of stainless steel. Besides chromium plating various details is widely used. The revealed resources of chromic ores are estimated at 15 billion tons in 47, 76% are concentrated in the republic of South Africa, 9 % - in Aktyubinsk oblast of Kazakhstan and 6 % - in Zimbabwe. The significant chromites resources are located in the USA, Finland, India, Philippines and Turkey - 6 % totally. More than 85 % of the confirmed chromic ores world resources underlay and are developed by mines. The chromites reserves for strip mining are taken into account on maintained deposits of Finland, Brazil, India, Madagascar.

The ores chromites reserves of Bushveldsk group of deposits in the republic of South Africa are estimated at 1 billion tons. But the quality of these ores is low, but it still can be used in manufacture of stainless steel. Kazakhstan has the largest chromites reserves, the average chromic oxide containing is 50 % that is much higher, than in ores all other countries. In the Kazakhstan ores there is a low content of iron and harmful impurity - phosphorus and sulfur, so it can be used in all spheres without restrictions. All chromic ores reserves of Kazakhstan and their extraction are concentrated in the Aktyubinsk oblast. The certain disadvantage is deep occurrence so there is a necessity of underground mining.

The common world production of chromic ore is approximately about 14 million tons per year. The prices for the Kazakhstan chromic ore in the world market is related to its quality and determined by contracts. The price of enriched ore of South Africa are exported to the USA is from $40 up to $120 per ton.

Last years because of universal recession of economy and falling of manufacture in a steel industry the chromate and ferrochrome market is under decay. The slump in prices and recession in demand was obvious. Now the chromic ore and ferrochrome world markets are on the up grade.

The republic of South Africa and Kazakhstan will have influence to the future of world ferrochrome industry, having the great reserves of chromic ores and it is stressed that Kazakhstan reserves is remarkable for its unique qualities. The maximal extraction of commodity chromic ore (after sorting and enrichment) in Kazakhstan has been achieved in 1990 and marked 3,7 million tons. Then there was a recession, down to 1,1 million tons in 1996, then again there was a rise. For 9 months of this year Don GOK has produced 2,1 million tons of commodity chromic ore and the containing of oxide chrome marked 50 %.

Mine " Youth " has been put into operation 1982. Its initial reserves were 62 million tons. On January, 1, 2003 estimate show that 41 million tons are have not been extracted yet. Extracted ore is remarkable for the high content of oxide chrome - 50-51 %. It is expected that the level of extraction next year will be 2 million tons per year, the extraction at the present time is 1,7 million tons. The "Youth" expected level next year is expected to be 1,8 million tons. The first mine called " the 10-anniversary of independence of Kazakhstan " with capacity 2 million tons of ore per year has been put into operation and the second one is under construction now since 2001.

This year the Finnish metallurgical company Outokumpu has signed the contract with " Kazchrome " on carrying out of engineering works and delivery of the equipment for new world's largest factory on manufacture chromite pellet for Don GOK. Having regard to the Finnish company announce it is stressed, that the factory will be put into operation in 2005, with the capacity of 700 thousand tons pellet per year.

After "the 10-anniversary of independence of Kazakhstan " mine operation the mine capacity will achieve 4 million tons of crude ore, and in view of other mine Kazakhstan will come out on top in the world on commodity chromic ore. Now ahead only the republic of South Africa the last year extraction marked 5,8 million tons of ore.

About extracted in it is processed on Aksusk and Aktyubinsk factories are extracting of 80 %. Other ore is exported to Russia and China. The Chinese export thus is increased. For example, 50 thousand tons of the enriched ore has been exported in October. According to forecasts, demand for chromic ore in China will be tripled within the nearest five years and will reach 3 million tons per year. It happened due to new enterprises operation of black and nonferrous metallurgy.

And Australian company Consolidated Minerals Ltd (CML) even treat an opportunity of its manufacture expansion due to factory construction in China. Finally it is expected an establishing of joint venture with any Chinese holding.

Having regard to International Chromium Development Association report in 2000 world ferrochrome production marked 4,8 million tons, in 2001 it has decreased by 30 %. Because of weak demand many factories, including such large, as Elkem in Norway have been closed. Acting on the basis of the world's largest ferrochrome manufacturer report - южноафриканской Xstrata companies of the South Africa, in 2001 annual capacities over the world in volume of 630 thousand tons of ferrochrome were inactive. High carbonic demand became more active only in the third quarter 2002.

Now in steelmaking and ferroalloy industries there is a rise, therefore manufacturers of chrome products will have a successful year as it was in 1995 due to the level of prices. Having regard to favorable long-term forecast of development of a world chromic complex its separate enterprises in the near future can face a number of problems connected to a sharp of a competition between manufacturers. Most likely, development of ferrochrome manufacture at the enterprises of the republic of South Africa and Kazakhstan, providing the minimal industrial costs, compensates leaving inefficient capacities in other countries. In other words, there will be a sanitation in scales of all branch, that as a whole will have a positive effect for consumers as the end price fallen on ferrochrome production.

In longer term the high rates of growth of consumption and manufacture of stainless steel of special doubts is estimated, taking into account continuously growing demand in key industries of mechanical engineering, in the automobile and electrotechnical industry, in car building, construction, release of the consumer goods, etc. However the expansion of capacities caused by this favorable forecast on manufacture and stainless steel, and ferrochrome is carried out by higher rates that will inevitably lead to overproduction of these products and prices reduction.

Manufacture of ferroalloys in China in 2002 has increased in comparison with 2001 by 5,4 %. Demand for mass kinds of ferroalloys in domestic market was active. Only normalization of deliveries of the electric power in southern provinces of the country constrained manufacture of some kinds of ferroalloys. Having regard to China Iron and Steel Assn report, import of ferroalloys to China 2002 has increased by 158 % - up to 93 thousand tons, including ferrochrome - by 198 %.

Now ferrochrome demand is highly estimated but deliveries are limited, in spite of the fact that the largest world manufacturer of ferrochrome of the Southern Africa has involved about 90 % of the capacities on its release, in comparison with 75 % in 2002г. Under analysts' statements, the present situation with ferrochrome deliveries will remain the same in the near future.

Now the price of nickel in the world market reached to $12030 per ton, against $6722 on the average for the last year. In this situation there are some offers of stainless steel manufacturers of to less an expensive nickel in melting, having replaced it to lame.

The release of "Kazchrome" ferrochrome is about 660 thousand tons per year, including 600 thousand tons high carbonic, up to 35 thousand tons middle carbonic and 25 thousand tons low carbonic. Besides it produces ferrosilicium, ferrochrome silicon, silicon manganese and near to 1500 tons of metal chrome.

The demand for ferroalloys is insignificant in Kazakhstan. Kazakhstan production is successfully sold in the USA, Europe and the countries of Southeast Asia. Among buyers such known companies, as " Tissen Groats ", "Avesta", "Nippon Steel" and "POSKO". If almost all production was exported to far Abroad in 2001 since 2002 it was expanded by Russian and Ukrainian enterprises. The market of China is very attractive and perspective. This country has capacious commodity market with dynamically developing manufacture. The advantage of China geographical position for Kazakhstan should be noted against to Europe or America. That is why the export of ferrochrome will be growing.

Vladislav NIKOLAEV, Expert, KZ-today IA