With all due respect, IMO there have been a number of excellent posts recently, on both the NOT and FWR forums, discussing the future world markets for chrome ore and ferrochrome. The arguments/debates, as they should have, have focussed on supply and demand. I would like to summarize the major points raised.

Supply

• Existing deposits of chrome ore are sufficient to supply the world’s demand for at least the next 100 years or so
• Potential constraints to ferrochrome production maybe the inability of the major producers in SA to operate at 100% capacity due to lack of available electricity at acceptable cost…..this may develop into a chronic supply shortage problem in the near future

Demand

• Will continue to rise as the economies of the consuming countries improve and will be particularly tied to the production level of stainless steel

The above are IMO are factors which I believe, most of us will more or less agree upon. There is one other factor, which has been demonstrated time and time again in commodity markets……….only the lowest cost producers will survive, irrespective of the existence of any cartels, since the latter have never been proven to be inherently stable institutions in periods of weak demand.

The US consumes about 14% of the world’s production of ferrochrome, the majority of which I believe is imported from SA. In spite of what Joe Hamilton might have previously stated, I believe this particular market to be a prime niche candidate for penetration by a new producer, provided that new producer is a North American one, and most likely an American one. My reasons are as follows:

• The US government considers ferroalloys as strategic commodities and may be prepared to go to great lengths to assure/support development of a “domestic” (i.e. NA)source
• The US government has an extremely protectionist attitude regarding American-owned companies/industry even if it requires ignoring organizations such as the WTO by creating trade barriers if deemed necessary

IMO Cliffs, an old, distinguished American mining company, could fit the bill if it can gain consolidated control of the ROF chrome ore deposits. These deposits appear to be of the highest quality in the world, appear to be mineable, at least in part, from surface and upgradeable if necessary to a quality suitable for metallurgical use-->>appears to have good potential for production of a relatively low cost ferrochrome product. Now, one could still argue that the remote location of the ROF is an impediment. However, I think that even if the costs of transport to/from the ROF are taken into consideration, a Cliffs ferrochrome could be price competitive FOB US with imported SA ferrochrome. If Cliffs can demonstrate that they can produce ferrochrome within the lowest quartile segment of the cost curve of the existing producers, they can be competitive. In addition, they already have the contacts in the US steel industry (and US government), a decent balance sheet and a positive cash flow.

Comments are always welcome.

Respectfully submitted

geoprof