Beneficiation lip service as hands-on-hips South Africa watches China usurp global ferrochrome edge

South Africa preaches beneficiation but it is certainly not practising it in the chrome mining space.

Instead, with its hands on its hips, it is watching the Chinese ascend to the top spot in ferrochrome, which forms the beneficiation baseline of the chrome-mining value chain.

South Africa has a mature chrome value chain, the 2010 socioeconomic benefits of which were 200 000 jobs and a contribution of R42-billion to this country’s gross domestic product (GDP).

However, South African ferrochrome’s rapidly declining market share is putting 60 000 to 80 000 of those jobs at risk, along with more than half of that GDP contribution.

Driving this home last week was the MetalBulletin Event’s chromite and ferrochrome conferences in Johannesburg.

Instead of at least maintaining the credence it constantly gives to local value addition, it is watching ferrochrome exports decline and raw chrome exports soar.

For decades, South Africans have been urging miners to refrain from exporting raw ore and to add value to it before it leaves the country.

For decades, the ferrochrome industry has been succeeding in doing just that – but now high electricity costs and high labour costs without concomitant productivity are returning concentration to the lowest rung of the chrome food chain – the exportation of raw ore.

South Africa has 82% of world chrome ore resources if upper-group two reef is added.

In 2010, it had 47% of chrome ore production and 42% of ferrochrome production.

Historically, it has locally beneficiated 100% of metallurgical- grade chrome ore and installed modern capacity to produce nearly five-million tons of ferrochrome a year.

It was up there with the gold-mining industry as an earner of R36-billion in foreign exchange.

Since 2006, it has paid R2.5-billion a year in taxes and invested R3.5-billion a year in plant and equipment, 90% of it locally sourced.

It was Eskom’s second-largest customer, paying R5-billion to R6-billion in yearly electricity tariffs.

But South Africa has taken all this for granted. Nobody has lifted a finger to do a thing despite cries for help.

China is taking over where we left off – and they do not have chrome resources.

Preaching beneficiation is not enough; it has to be practised, or all credibility is lost.