Understanding Chromite

Iron Magnesium Chromium Oxide - (Fe, Mg)Cr2O4

Annual production of chromite ores is approximately 19 Mt, 90% of which is used to make ferrochrome alloy for use in steel. Chromium ores and products are sold in three principal forms worldwide. Direct shipping ore is referred to as lumpy ore and is sold by contract only. The lump ore is defined as the > 6 mm size fraction; < 6 mm fractions are sold as fines and carry a lower price. High-grade lump ore can be fed directly into smelters and there is a global trade in this material, particularly from developing countries to a growing metallurgical market in China. Fine-grained chromite concentrates are not amenable to smelting and must be pelletized first; most pelletizing operations are integrated with smelters and there is little trade in concentrates. However, the bulk of trade in chromium products is in the ferrochrome product of smelting. Most ferrochrome is produced by vertically integrated large-scale mining, pelletizing and smelting operations that produce the ferrochrome on site or very near to the mine site.

The dominant player in the world ferrochrome market is South Africa, which accounted for 43% of global production in 2005. Major producers include Assmang Ltd., Kermas Group Ltd., (formerly Samancor Chrome Mines, South Africa), Xstrata South Africa Proprietary Ltd., and International Ferro Metals Ltd. Most ferrochrome produced in South Africa is made from ores mined from the stratiform chromitite deposits of the Bushveld Complex of South Africa. Annual production in 2005 was 7.645 Mt. These ores have moderate grades compared with some smaller deposits worldwide but are economic due to economies of scale and simple deposit geometry. Other important producers are India (3.640 Mt), Kazakhstan (3.566 Mt), Finland (0.572 Mt), Turkey and India.

Lump ore prices are reported in units called dry metric ton units (dmtu). The price of an ore is found by multiplying the concentration of Cr2O3 in wt% by the price in dmtu; for example, a Turkish lump ore containing 39% Cr2O3 was sold in May 2008 at a price of USD14.97/dmtu for a price of $583/Mt ex ports. The value of lump ore increases dramatically as the grade increases above 30%; no significant international trade takes place at grades below this value. The value of a concentrate containing 50% Cr2O3 is approximately $750/ton.

The smelting process adds considerable value to chromite ores if a deposit is large enough to justify the capital cost of a smelter. The product of smelting is ferrochrome alloy, whose price has rapidly increased in recent years due to interruptions of the electricity supply in South Africa and mounting demand from China. The Q3 contract price for high-carbon 65% ferrochrome is $US $2.05, up from about $US 0.60 in mid-2005. The contained metal value in a ton of ore at 40% Cr2O3 therefore is $1,890 a considerable increase over the May 2008 lump ore value of about $600 ex ports.

Other Ferrochrome Operations

The closest geological analogs to the Blackbird One Deposit are the Kemi Mine in Finland, the Ipueira-Medrados Deposit in Brazil, and the Sukinda Valley Deposit in India. All consist of massive chromitite bodies up to several tens of metres thick and hundreds of metres long, hosted by ultramafic rocks predominantly consisting of dunite and harzburgite, and all are currently being mined.

The Kemi Mine is the best described of these similar deposits. It is a massive body 40 metres thick dipping 70. Ore reserves in January 2006 were 41.1 Mt grading 24.5% Cr2O3 and Inferred Resources of 86.1 Mt at 29% Cr2O3. The Cr/Fe ratio is 1.53. From 1968 to 2005 mining was from an open pit, but with stripping ratios becoming intolerable in the late 1990's, an underground operation was begun, and since 2006 all production has been from underground, (Duke, 1998).

Production from Kemi in 2005 was 1.1 Mt, recovering 572,000 t of lumpy ore (36% Cr2O3) and metallurgical grade concentrate with a grade of 44% Cr2O3, which were used to produce 235,000 t of ferrochrome (Duke, 1998).

Grades at Noronts Blackbird One compare favourably with those at the world's most important chromite producers. The deposit is the latest example of the Kemi Deposit type, represented by important producing mines on three continents that collectively account for approximately one third of global chromite production. A geophysical anomaly known to correspond to the presence of massive chromitite persists for more than one kilometre along strike from the Blackbird One Deposit, indicating that the potential exists for a multimillion ton resource comparable in size to the Kemi, Sukinda Valley, or Ipueira-Medrados Deposits.

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