South African Chrome Industry
Position Paper
March 2014
THE SOUTH AFRICAN CHROME INDUSTRY
A POSITION PAPER
BY
SSI Holdings (Pty) Ltd
March 2014
Page 1 of 21 SSI Holdings (Pty) Ltd
South African Chrome Industry
Position Paper
March 2014
EXECUTIVE SUMMARY Chromite is an iron chromium oxide: FeCr2O4. It is an industrially important mineral for the production of metallic chromium used as an alloying ingredient in stainless and tool steels. South Africa is endowed with large resources of chromite, located in the western and predominantly in the eastern limbs of the Bushveld Igneous Complex. The country holds about 70% of the world’s total chrome reserves. South Africa has reserves of about 3.1 billion tonnes and a further estimated resource of 5.5 billion tonnes (circa 2011). South Africa produces 75% of the world’s ferrochrome for the local and export markets. Chromite is found in peridotite from the Earth’s mantle. It also occurs in layered mafic and ultramafic intrusive rocks which contain olivine, pyroxenes and plagioclase, layers being up to 18m in thickness. The vast Bushveld Igneous Complex is a layered mafic to ultramafic igneous body with some layers consisting of 90% chromite making the rare rock type, chromitite. Chromite is dark grey to black in colour with a metallic to submetallic lustre. It has a high specific gravity of between 4 and 5. Although there are a number of chrome seams in the Bushveld Igneous Complex, only three are currently considered to be economically viable. These seams are remarkably consistent throughout the Bushveld Igneous Complex in both physical and chemical nature. The lower of the three seams is known as the LG6 (lower group 6) seam and is approximately 1,1 to 1,3 metres thick. The MG suite of seams (middle group) is located above the LG6 seam and the individual seams within the MG suite vary in thickness from 1,1m to 1,8m with the MG1 being approximately 1,6 to 1,8 metres thick. The chrome content of the LG6 seam is higher than that of the MG1 seam at between 43 to 47% Cr2O3 compared to the 42% Cr2O3 of the MG1 seam. The third economically viable seam is the UG2 (Upper Group 2) which contains up to 43.5% chromite. Thin seams of chromite also occur in the Merensky Reef of the Bushveld Igneous Complex which is the main source of platinum group metals (PGE). As a result of the country’s abundant resources and reserves of chromite ore, numerous international mining and investment companies have developed chromite ore mines and beneficiation facilities. This has enhanced South Africa’s foreign direct investment position. In addition employment opportunities have been created. There are two major chromite /ferrochrome production companies: -
Glencore/ Merafe Resources Joint Venture
The biggest producer of ferrochrome globally which has an annual production capacity of 2,3 Mt/a. All the chromite ore is produced from its own mines on the eastern and western limbs of the Bushveld Igneous Complex and beneficiated in its nearby smelting facilities. Chromite resources and reserves can support the above planned capacity for in excess of 100 years.
Page 2 of 21 SSI Holdings (Pty) Ltd
South African Chrome Industry
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Position Paper
March 2014
Samancor Chrome
The second largest producer in the world has estimated chromite resources of 650Mt which equates to proven and probable reserves of 16,6Mt and 23,4Mt respectively. It has two mining centres in the Eastern and Western limb of the Bushveld Igneous Complex with a capability of producing 1Mt/a of charge chrome from three smelting operations, with Ferrometals being one of the largest ferrochrome plants globally. In addition there are a number of medium to small ferrochrome producers (< 500ktpa) established with international finance on both limbs of the Bushveld Igneous Complex. The majority of these producers have on-site smelting plant facilities. It is forecast that there will be a strong and stable growth in the stainless steel industry over the next 20 years and the demand for stainless steel, which ultimately drives demand in the chrome ore market, will increase primarily due to increased demand from China and India. There is accordingly scope for South Africa to increase its primary chrome ore production considerably. Despite a decrease in chrome concentrate prices from 2011 to 2013, it is forecast that there will be a price recovery over the medium-term, with steady annual increases in prices thereafter.
Page 3 of 21 SSI Holdings (Pty) Ltd
South African Chrome Industry
Position Paper
March 2014
Contents 1.
Introduction.................................................................................................................................... 5
2.
Geology.......................................................................................................................................... 5
3.
Exploitation .................................................................................................................................... 6
4.
3.1
Mining ..................................................................................................................................... 6
3.2
Beneficiation/ Ore Dressing .............................................................................................. 11
Industry Analysis ........................................................................................................................ 18 4.1
Strengths ............................................................................................................................. 18
4.2
Weaknesses........................................................................................................................ 19
4.3
Opportunities ....................................................................................................................... 19
4.4
Threats ................................................................................................................................. 19
5.
Conclusion ................................................................................................................................... 19
6.
References .................................................................................................................................. 21
Page 4 of 21 SSI Holdings (Pty) Ltd
South African Chrome Industry
Position Paper
March 2014
1. Introduction Chromite is an iron chromium oxide: FeCr2O4. It is an oxide mineral belonging to the spinel group. Magnesium can substitute for iron in variable amounts as it forms a solid solution with magnesiochromite (MgCr204). It is an industrially important mineral for the production of metallic chromium used as an alloying ingredient in stainless and tool steels. South Africa is endowed with large resources of chromite, located in the western and predominantly in the eastern limbs of the Bushveld Igneous Complex (BIC). The country holds about 70% of the world’s total chrome reserves. South Africa produces 75% of the world’s ferrochrome for the local and export markets.
2. Geology Chromite is found in peridotite from the Earth’s mantle. It also occurs in layered mafic and ultramafic intrusive rocks which contain olivine, pyroxenes and plagioclase, layers being up to 18m in thickness. The vast BIC is a layered mafic to ultramafic igneous body with some layers consisting of 90% chromite making the rare rock type, chromitite. Chromite is dark grey to black in colour with a metallic to submetallic lustre. It has a high specific gravity of between 4 and 5. The mafic rocks, termed the Rustenburg Layered Suite, are approximately 8kms thick in the Eastern Limb and are formally divided into five (5) zones, the Marginal Zone at the base of the succession, the Lower Zone sporadically distributed, the Critical Zone marked by the appearance of chromitite layers which are grouped into three sets, the Lower, Middle and Upper groups. The sixth chromitite seam in the Lower Group (LG6) is an importance source of chromite ore. These chromite deposits are classified as stratiform deposits. Although there are a number of chrome seams in the BIC, only three are currently considered to be economically viable. These seams are remarkably consistent throughout the BIC in both physical and chemical nature. The lower of the three seams is known as the LG6 (lower group 6) seam and is approximately 1,1 to 1,3 metres thick. The MG suite of seams (middle group) is located above the LG6 seam and the individual seams within the MG suite vary in thickness from 1,1m to 1,8m with the MG1 being approximately 1,6 to 1,8 metres thick. The chrome content of the LG6 seam is higher than that of the MG1 seam at between 43 to 47% Cr 2O3 compared to the 42% Cr2O3 of the MG1 seam. The third economically viable seam is the UG2 (Upper Group 2) which contains up to 43.5% chromite. Thin seams of chromite also occur in the Merensky Reef of the BIC which is the main source of platinum group metals (PGE). Reserves and Resources Reserves are defined as proven in-situ tonnages, while resources are estimated additional tonnages.
Page 5 of 21 SSI Holdings (Pty) Ltd
South African Chrome Industry
Position Paper
March 2014
South Africa and Zimbabwe hold about 90% of the world's chromite reserves and resources (stratiform deposits), with South Africa having reserves of about 3.1 billion tonnes and a further estimated resource of 5.5 billion tonnes (circa 2011).
3. Exploitation 3.1 Mining In 2002 14,6Mt of chromite ore was mined worldwide of which South Africa was the largest producer at 44% (equivalent to 6,43Mt). In 2010 South Africa produced 10,87Mt of chromite ore; an increase of 83,1% over the eight year period. Chromite is mined primarily from the UG2, MG and LG chromite seams. The UG2 also contains significant quantities of PGE’s. Thus several platinum mines produce chromite as a by-product. There are several chromite mines feeding chromite ore for beneficiation by the developed ferrrochrome industry. The majority of the chrome mines are located in the Eastern BIC in the Steelpoort valley. A lesser number of chrome mines are operating in the Western limb of the BIC. Samancor Chrome Samancor Chrome is the second largest ferrochrome producer in the world with estimate chromite resources of 650Mt which equates to proven and probable reserves of 16,6Mt and 23,4Mt respectively. Samancor Chrome was established in 1975 through a merger of SA Manganese Ltd and Amcor Ltd. In June 2005 Kermas SA (Pty) Limited (Kermas) purchased the bulk of Samancor Chrome’s wholly owned interests. International Mineral Resources acquired a 70% direct shareholding in Kermas in November 2009. Samancor has two mining centres; Eastern Chrome Mines (ECM) in the Steelpoort district of the Mpumalanga Province and Western Chrome Mines (WCM) in the Rustenburg/Brits districts of Northwest Province. These mining centres comprise five mining areas each with an open cut operation in WCM. Overall production capacity is some 5,8 Mt/a Run of Mine (ROM) ore. Underground mining is based on mechanised room-and-pillar mining method, typically with low angle adits connecting to horizontal access levels. Broken ore is hauled by load haul dumpers to horizontal conveyors which convey the ore to the adit conveyor for discharging onto the surface ROM stockpile. In the thin seam mining operations, broken ore is moved by scrapers through a system of ore passes and underground trains to the adit conveyor for conveying to surface. Assmag Limited Chromite operations at the Dwarsrivier Mine form part of the Chrome Ores & Alloys of Assmag Ltd. The mine is located in the Steelpoort district of the Mpumalanga Province. Currently all the chromite production is sourced from underground since 2005 at a rate of 1,5 Mt/y ROM. Current underground design is 120 000 tonnes per month ROM. During mining, a slightly diluted run of mine ore inclusive of the “false” hangingwall is fed to the beneficiation plant. In the dense media separation part of the plant, the Page 6 of 21 SSI Holdings (Pty) Ltd
South African Chrome Industry
Position Paper
March 2014
coarse fraction is upgraded to 40 percent Cr2O3, with a yield of 80 percent. In the spiral section of the plant the finer fraction is upgraded to 44 percent Cr2O3, and 46 percent Cr2O3 respectively, for metallurgical grade fines and chemical grade fines. A 67 percent yield is achieved in the spiral circuit. The mine is specifically geared to deliver high grade chromite to Assmag’s Machadorp Works Ltd. Chrome ore is mined near Rustenburg (Rustenburg Minerals) in the North West Province, from established opencast and underground operations. Rustenburg Minerals is 44% held by a black economic empowerment (BEE) partner, Mampa Investment Holdings. The company expects the bulk of its required chrome ore supply to be satisfied from its two underground shafts during calendar 2013, until which time, the opencast operations will supply the necessary ore quantities. R39 million was spent on the development of two underground chromite mines at Rustenburg Minerals, the scheduled commissioning of which is expected to meet their planned production volumes during calendar 2013. Rustenburg Minerals produced and sold approximately 201 000 tons ROM, lumpy and concentrate grades in 2012. Production from Rustenburg Minerals is supplied mainly to the local market. In addition the group is concentrating chrome ore tailings from previous mining operations at Zeerust Chrome Mines Limited (Zeerust), which is located about 70kms north of Zeerust in the North West Province. Zeerust produced and sold approximately 60 000 tonnes in calendar 2012. The summary of the reported resources and reserves of the above operations as per the 2012 annual report are: Operation
Dwarsrivier Rustenburg Minerals Zeerust
Resources Measured & Indicated Mt 55.0 5.4
Chromite % Cr2O3 38.11 n/a
3.3
n/a
Reserves Proven & Probable Chromite % Mt Cr2O3 39.15 34.1 3.3 n/a 2.5
n/a
Glencore Merafe Resources Joint Venture Merafe’s wholly owned Merafe Ferrochrome & Mining has a 20.5 percent interest in the Glencore-Merafe chrome venture. Glencore owns the remaining 79.5 percent.
This Joint Venture’s (JV) chrome mines comprise: -
Helena Chrome mine with an annual ROM production capacity of 1,2Mt/a; Thorncliffe Chrome mine with an annual ROM production capacity of 1,4Mt/a; Magareng Chrome mine, the most recent commissioned chrome of the JV, is the second phase expansion of the Lion ferrochrome mine project; Boshoek Chrome mine is an open cast mine with 2 pits that have walls ranging between 25 and 35m, extracting around 100,000 tonnes of ore per month.
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South African Chrome Industry
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Horizon Chrome mine, which was up for sale during 2013 as it is one of the more expensive mines, has been put on care and maintenance. The sale aimed to keep the JV’s costs as low as possible. The sale of Horizon Chrome would not affect the supply of chrome to the smelter operations as the JV has sufficient proven reserves and ROM capacity in place. Chrome ore is sourced from the Kroondal, Waterval and Marikana platinum mines as a by-product for feedstock to the Wonderkop, Rustenburg and Boshoek ferrochrome plants. The JV’s operations are located in the both the Steelpoort district of the Mpumalanga Province and the Rustenburg/Brits district of the NorthWest Province.
International Ferro Metals Ltd International Ferro Metals Ltd’s (IFM) Lesedi chromite mine and integrated beneficiation and smelting operations are situated at Buffelsfontein, 100km north-west of Johannesburg, South Africa. The Buffelsfontein (Lesedi) ferrochrome mine and smelting plant was the first chromium operation in South Africa that had a smelter (processing plant) adjacent to the mine. The mine is projected to be one of the lowest cost producers of ferrochrome worldwide. The Lesedi open pit mine reached the end of its life in July 2012. The Company is currently exploiting the nearby Sky Chrome deposit in which it holds an 80% interest, after exercising an option to acquire Purity in December 2005. This has allowed the Company to significantly increase run-of-mine production. Sky Chrome has an estimated chrome ore resource of 104Mt. Sky Chrome’s open pit mining operations commenced in June 2011and ramped up to 50,000 tonnes per month (tpm) ROM in the first quarter of calendar 2012. The mine was further ramped up to 70,000 tpm ROM after the planned termination of the Lesedi open pit operations. The measured and indicated resources for Sky Chrome are summarised at 51.9Mt at 33.5% of Cr2O3 and 30.1Mt at 33.53% of Cr2O3 a as per the Mineral Resources and Reserves statement detailed in the 2012 annual report. Chromite is extracted from the MG1 and MG2 seams by underground and the Middle Group seams by open pit. The table below summarises the 2012 annual report Mineral Resources and Reserves Statement.
Page 8 of 21 SSI Holdings (Pty) Ltd
South African Chrome Industry
Position Paper
Operation Measured Mt Lesedi U/G Sky Chrome U/G Sky Chrome Open pit
11.23 49.8
Resources Chromite % Cr2O3 38.5 33.6
March 2014
Reserves (ROM) Proven Mt Chromite % Cr2O3 15.7 25.97 33.8 28.65
2.1
32.77
2.4
29.09
Indicated Mt
Probable Mt
4.02 24.27
Chromite % Cr2O3 38.83 33.53
5.8 21.8
Chromite % Cr2O3 26.46 28.82
5.83
33.53
6.97
29.12
Lesedi U/G Sky Chrome U/G Sky Chrome Open pit
LANXESS Chrome Mining (Pty) Ltd LANXESS evolved from the Bayer (Pty) Ltd and Sentrachem JV (50:50) ( a JV called Chrome Chemicals South Africa (Pty) Ltd) which founded the Chrome International South Africa (CISA) in 1996. Prior to this Bayer (Pty) Ltd owned Rusternburg Chrome Mine and Merebank site. In 2007 LANXESS took 100% control of CISA. Rustenburg Chrome Mine has been purchased by Lanxess, the company’s leather business unit, who has been granted a New Order Mining Rights. This has resulted in a name change of the company to Lanxess Chrome Mining (Pty) Ltd of which Dirlem (RF) (Pty) Ltd, which is partly owned by LANXESS employees, will hold 26% of the shares in the new company. The mine has a reputation as being a supplier of high quality chrome ore. It is situated some 14 kilometers from the town of Rustenburg in the North West Province. Mining method employed is typically mechanised room-and-pillar with an adit conveyor conveying the broken ore from horizontal levels to surface for processing. Tharisa Chrome The mine is located in the Northwest Province on the south-western limb of the BIC, approximately 35kms east of Rustenburg. The mining rights are held on the farms Kafferskraal 342 JQ and Rooikoppies 297 JQ in the Marikana district. The resource on Kafferskraal has an outcrop length of some 5kms across the farm. The underlying chromite seams of the Middle Group dip at 12 to 15 degrees from the outcrop in a northerly direction. Currently the mine production rate is 400ktpm ROM by open pit mining method. At a 200m highwall, the Life of Mine is 23 years to 2038. The underground resource has an estimated Life of Mine of 36 years to a depth of 750m.
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South African Chrome Industry
Position Paper
March 2014
The broken chromite ore is processed to a high grade concentrate in two plants, Genesis at 100tpm and Voyager at 300tpm. Both PGM and chrome concentrates are produced from these two plants. Chromex Chromex Mining plc, an AIM quoted dedicated chrome company, was a subsidiary of both Afarak and Kermas that specializes in chrome ore mining and processing in South Africa. It was established to acquire, control and develop chromite mining and processing facilities. Synergy Africa, a joint venture (JV) between Finnish group Ruukki and UK-based investment holding company Kermas, acquired Chromex in 2011.It currently has two key mining assets located on the BIC in South Africa, which between them have total resources of approximately 41 million tonnes of chromite. The Stellite mine, on the 271 hectare Stellite chrome project in the Western limb of the BIC, has a New Order Mining Rights with a resource estimate of 31,9-million tonnes of opencast and underground chromite comprising four seams. The Stellite mine commenced production in July 2008 and has ramped up to 40 000 ROM ore t/m, its design capacity. It is some 80 km from Ruukki’s Mogale alloy processing plant operation in Krugersdorp, Gauteng Province. The Mecklenburg mine is located in the Eastern Limb of the BIC. It has an underground resource of 9,6Mt with an approved New Order Mining Rights. The Company acquired the Mecklenburg mining right as part of the acquisition of the Chromex plc in a joint venture with Kermas Limited in 2010. The Mecklenburg mining right is located in the Magisterial District of Sekhukhune, Limpopo Province, South Africa. During the second half of 2012, Chromex entered into a lease agreement with the Magadimana Ntweng Traditional Community, the owners of the Mecklenburg farm, which was followed shortly by the establishment of the opencast mine. The mining right is held by Chromex Mining Company (Pty) Ltd ("Chromex"), a 37.74% owned subsidiary of Ruukki and is valid until June 2018. Ruukki will maintain the mine’s current ROM production capacity of 25 000 metric tons of chrome a month, all of which is sold into the market as a run-of-mine product. At the current production level, the company estimated the project’s opencast mining life to reach completion at the end of 2014, after which it would evaluate the possibility of continuing operations underground. ASA Metals (Pty) Ltd ASA Metals (Pty) Ltd is a joint venture between Eastern Asia Metals Investment Co Ltd from China and the Limpopo Economic Development Enterprise of South Africa. Dilokong Chrome Mine and its associated processing facilities are set against a hillside 30km from Burgersfort on the R37 approximately 125 kilometres south of Polokwane on the eastern rim of the deposit-rich BIC. Although ASA Metals was established in 1997, its captive chromite mine, Dilokong Chrome, was founded some 30 years ago and operated as a Government training mine. When ASA Metals was established in 1997, it obtained the full shareholding of Dilokong Chrome Mine.
Page 10 of 21 SSI Holdings (Pty) Ltd
South African Chrome Industry
Position Paper
March 2014
Only the LG6 seam, dipping between 16° and 9° is mined at Dilokong Chrome Mine. Conventional scraper mining methods are employed. The ore is drilled and blasted before being scraped mechanically to loading points from where it is transported to the shaft tips in locomotive pulled hoppers. The ore is then hoisted to surface by conveyor belts installed in the incline shaft. ROM ore is further beneficiated on surface through a series of size classification and density separation steps that allows for efficient separation and removal of pyroxenite waste from the chromite. Foundry sand produced during the on surface beneficiation is stockpiled separately for supply to international customers while lumpy chromite and metallurgical concentrates are transported to the on-site smelter for further beneficiation. 3.2 Beneficiation/ Ore Dressing 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 in stainless steel. Alloy steel production is the second largest user group of ferrochrome with smaller quantities used in the production of nickel-based and other special alloys, as well as in the iron and steel foundry industries. A distinction should be drawn between the two types of ferrochrome produced. Ferrochrome made from South African chrome concentrate is called charge chrome, meaning that its 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 amongst stainless steel producers. Samancor Chrome Samancor Chrome operates three smelting operations being, Ferrometal (FMT), Middelburg Ferrochrome (MFC) and Tubatse Ferrochrome (TFC) with a capability of producing 1Mt/a of charge chrome. Ferrometals Ferrometals is situated in Emalahleni (formerly called Witbank), Mpumulanga, and is one of the largest individual ferrochrome plants in the world. Technology employed is open and semi-open Submerged Arc Furnaces (SAF) and two closed furnaces. The bulk of its production comprises of charge chrome while medium carbon ferrochrome (IC3) is also produced for the foundry and speciality steel markets. FMT is the base from which several Joint Ventures operate including Crometals (Pty) Ltd, Poschrome (Pty) Ltd and Elkem Ferroveld. Page 11 of 21 SSI Holdings (Pty) Ltd
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March 2014
Middelburg Ferrochrome Middelburg Ferrochrome was established in 1964 in Middelburg, Mpumulanga, initially as a Low Carbon Ferrochrome production facility. Charge chrome was first produced on this site in 1974 by Middelburg Steel and Alloys (Pty) Ltd, which was acquired by Samancor in 1991, making it one of only a few alloy plants in the world able to produce both charge chrome and low carbon ferrochrome. The core business of MFC is the production of charge chrome from two submerged arc furnaces (M1 and M2, semi closed, 40 MW), and two direct-current plasma furnaces (M3 and M4, closed, 50 MW and 60MW respectively) A metal recovery plant is also operated on site to recover ferrochrome metalics from the existing slag dumps, as well as from the slag arising from the M1 and M2 operations. The facility also operates a pelletisation plant for the preparation of some of the fine ores for use in M1 and M2 furnaces. A low carbon ferrochrome production facility is also located on the premises. This facility operates three furnaces, being two 9MW and one 17 MW furnaces designated B, C and Open Arc. B and C furnaces are semi closed furnaces producing ferrosilicochrome (FeSiCr), and the open arc furnace is a slag melter, with no carbonaceous reduction reactions taking place in it. MFC is currently investigating the feasibility of electricity generation from waste gas. Tubatse Ferrochrome Tubatse Ferrochrome was initially built in 1975 as a joint venture between Gencor and Union Carbide Inc of the USA. Samancor acquired the Union Carbide and Gencor shareholdings in 1975 and 1989 respectively. During the years 1989-1990 the plant was expanded to five furnaces with the sixth furnace being built in 1996. The plant is situated in Steelpoort, Limpopo Province and is in close proximity to ECM’s operations. The core business of the operation is the production of charge chrome using six SAFs, one metal recovery plant, and a Pellet and Sintering Plant (PSP). The smelting complex includes Tubatse Chrome, a joint venture with Sinosteel and NST Ferrochrome (Pty) Ltd. Assmag Limited Introduction In 1971 Ferralloys Limited, a wholly-owned subsidiary of Assmang, erected a ferrochrome smelter at Machadodorp for the production and export of charge and lowcarbon ferrochrome. In addition the plant has been designed to produce chemical grade products. After a major reinvestment and expansion programme, completed in 2005, the works achieved a charge chrome capacity of 300,000 tons per annum. In mid-2010, as a trial, one of the four furnaces was converted to producing ferromanganese (HCFeMn). A further two furnaces have been converted to produce ferromanganese from 2012. The works has ISO 9001 / 2008, OSHAS 18 000/2007 and ISO 14001 / 2004 certification.
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March 2014
Raw Materials Ore: Reductants: Flux: Handling:
The Dwarsrivier Chrome Mine, located 140 km from Machadodorp, supplies quality lumpy ore and concentrate to meet the Work’s ore requirements. All reductants are currently sourced locally. These include coke, char and metallurgical coal. Quartz and limestone are supplied under contract by local quarries. An automated materials handling system distributes the raw materials to the four furnaces
Pelletising The metallurgical concentrate, together with recycled baghouse dust, is pelletised using Outokumpu technology. The pellet production capacity is 350,000 tons per annum. Pellets improve furnace production and efficiency. Furnaces Using computer-based mass balances and automated batching systems, the raw materials are blended into a charge suitable for each of the furnaces. The blend varies depending on the ferrochrome specification required. The furnace operations consist of two open 33 MVA , one open 30 MVA (all of Tagliaferri design) and one closed 54 MVA submerged arc furnace (Titaco) with preheater (Outokumpu). The combined capacity is approximately 230,000 tons per annum of charge chrome, and approximately 50,000 tons per annum of ferro-manganese. Slag-free ferrochrome ingots are produced by bottom ladle teeming. All slag and ladle skulls are cooled and sent to the Metal Recovery Plant. Metal Recovery Plant (MRP) Ferrochrome production results in a discard slag, which contains entrapped ferrochrome metal. This ferrochrome can, however be recovered in the metal recovery plant which has an installed capacity of some 20,000 tons of saleable product per annum. The slag and skulls which are recovered by excavator and front-end loader are crushed and screened into 10 x 3mm, 3 x 1mm and -1mm size fractions. Batig and Delkor jigs are used to separate the metal from the slag in the coarser fractions while spirals are used to separate the -1mm material. The waste slag is returned to the slag dump after hexavalent chromium neutralization. Crushing and Screening The three stage crushing and screening plant is automated and closely controlled to ensure that the ferrochrome complies with customer size requirements. The plant is operated in campaigns to crush products with different silicon specifications. All products are weighed and stockpiled according to size and silicon specification.
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Ferrochrome Products Furnaces MRP Size To Customer Specification Sizes 10 x 3mm;3 x 1mm;-1mm Si 3% - 6% Chemistry Not Guaranteed (Typical Only) Cr 51.5% to 52.5% Typical Slag Content 2.5% max for 10 x 3mm; 10% max for 3 x 1mm and 15% max for -1mm. There is also a 15% max 10 x 3mm middlings product. S 0.060% max (0.040% typical) P 0.030% max (0.023% typical) C 6.3% - 8.0%
The group holds a 51% share in Minerais U.S. LLC (Minerais) which is a limited liability company registered in the state of New Jersey in the United States of America (USA). Minerais is a trading company, and responsible for marketing and sales administration of the group’s products in the USA, in particular manganese and chrome alloys, and trades in various related commodities. Glencore/ Merafe Resources Joint Venture Glencore-Merafe JV has been the largest ferrochrome producer in the world since 2004, producing up to 16% of the world’s ferrochrome requirements. The Venture produced a total of 1 180 000 tonnes of ferrochrome in 2012, which is 8% less than its production in 2011, using only 66% of its operating capacity. Lion Smelter 1 - Lion Smelter is a ferrochrome smelter which receives ore from the Helena, Thorncliffe and Magareng mines. The smelter is located near Steelpoort, South Africa. Lion Smelter has an annual production of 360 000 tonnes and comprises two closed furnaces utilising the in-house patented Premus technology in the kilns. Heavy rainfall and community unrest affected progress on the civil work for Phase II of the Lion ferrochrome plant in Limpopo Province during the first quarter of 2012, however good progress with its construction has been made and the project will be hot commissioned toward the end of 2013. Lion II, named as a value-adding project by the South African government, will have an annual capacity of 360 000 tonnes, and will be the most energy- and cost efficient of the Venture’s plants. This will increase its production capacity to 2 339 000 tonnes per annum. Lydenburg Smelter receives chrome ore from the Helena, Thorncliffe and Magareng mines with an annual capacity of 396 000 tonnes. The smelter comprises four furnaces, three closed furnaces and one semi-closed furnace utilising the in-house patented Premus technology in the kilns. 2011 200 % change The Rustenburg ferrochrome plants are: -
-
Wonderkop with an annual capacity of 553 000 tonnes ferrochrome and comprises 6 conventional semi-closed furnaces and the Bokamoso pelleting and sintering plant using Outotec technology. Rustenburg with an annual capacity of 430 000 tonnes ferrochrome and comprises 6 conventional semi-closed furnaces and the newly commissioned Tswelopele pelleting and sintering plant using Outotec technology. Page 14 of 21 SSI Holdings (Pty) Ltd
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Boshoek Smelter - Boshoek Smelter is a ferrochrome mine and smelter which began operations in 2001. The mine is located 21km north of Rustenberg, South Africa. Boshoek Smelter has an annual production capacity of 240 000 tonnes. The salient features of the beneficiation processes are: Fully integrated Outukumpu pelletising, pre-heating and smelting plant; Designed to accept a large proportion of material as fine ore feed (65-85%) which gives high flexibility in fine ore input selection; Two furnaces of 110 MVA installed capacity; Closed furnace configuration reduces pollution and enables CO product utilization. Use is made of the CO rich furnace off-gas to pre-heat the feed - reducing electrical energy consumption, reducing the overall environmental footprint of the process; Agglomeration capacity of 540 000 tonnes per annum utilising Outukumpu technology. Agglomerated ore feeds allow increased chromium recovery efficiencies and flexibility in ore sourcing strategies; The large capacity of the Boshoek pelletizing plant offers specific flexibility in the process; High temperature (1200Oc)sintering process; Metal recovery plant capacity of 45 000 tpa slag treatment;
Ferrochrome Products Normal grade product composition specifications Furnaces Size To Customer Specification Sizes Si 3% - 5% Chemistry Cr 50% to 51.5% Slag Content S < 0.050% P 0.030% max C 6% - 7%
MRP Crushed and screened to customer requirements Not Guaranteed (Typical Only) Typically < 3%
Boshoek smelter also produces an alternate grade of < 50% Cr. International Ferro Metals (Pty) Ltd The beneficiation plant and the pelletising/sintering plant was commissioned in January 2007, the same month furnace 1 came on line. Furnace 2 came on line one month later. In August 2009, the Company embarked on the construction of its CDM compliant electricity co-generation plant which was designed to generate an average of 13.7 MW, being 11% of IFM’s overall electricity requirements, which will reduce costs and allow the Company to achieve 100% production capacity if Eskom’s electricity constraints are legislated. The Company developed the adjoining Sky Chrome ore body, accomplished efficiencies in the Lesedi mine, and entered into an agreement with Rustenburg Platinum Mines Ltd to finance the construction of a UG2 chrome re-treatment plant from which it takes chrome concentrates, an arrangement that can give it 30% of its beneficiated ore requirements at a low cost. The co-generation plant that the Company had installed ramped up (after some teething problems) to where it is now, currently supplying 10% of total power Page 15 of 21 SSI Holdings (Pty) Ltd
South African Chrome Industry
Position Paper
March 2014
requirements. This is well on the way to achieving the Company’s 11% target. Against the backdrop of increasing electricity prices, the co-generation facility is a useful buffer. Ore extracted from the mine is crushed to minus 85mm, i.e. smaller than 85mm. This ore is then fed into the beneficiation plant where the entrenched waste is separated from the ore. Ore is separated in two sizes. Lump ore of between 10 to 85mm in size is separated from concentrate ore which is sized between 0 and 1mm. Waste is separated by dense medium separation and concentrate material is separated through a spiral centrifugal water process. Fine waste is separated in a thickener and the sludge is pumped to a tailings dam. The design of the plant caters for the separate treatment and storage of different ore streams by operating in campaigns. The streams are managed independently in order to respond to quality variations, without impacting on stockpiling, plant availability or processing efficiency. This ultimately allows for products from the two ore bodies at Lesedi to be blended in a controlled way, to achieve optimum processing during pelletising and smelting. The beneficiation plant is designed to produce only two types of product, namely lumpy ore and concentrate, to maximize the recovery of the lumpy fraction for the production of ferrochrome. Pelletising & Sinter Plant This involves grinding the chromite concentrate in a ball mill, pelletising a mixture of concentrate, coke, fines and bentonite which acts as a binder, then heating the pellets in a steel belt sintering furnace. In sintering, the pellets are heated to form strong bonds between the chromite grains to yield and agglomerate material. The sintered material is sized and then used as feed to the furnace. The world-renowned engineering and technology supply company Outukumpu (Oututec) provided the pelletising and sintering technology; the Outukumpu technology has been proven at a number of sites, including other ferrochrome operations in South Africa. The process is extremely energy-efficient and produces strong, high quality pellets with low binder requirements and high chrome content. Sintering ensures that pre-oxidation takes place. This modifies the crystal structure and makes the pellets more readily reducible in the smelting furnace. Furnace Operation Ferrochrome is then produced using submerged arc furnaces. IFM’s plant consists of two submerged arc closed-top furnaces, each rated at 66 MVA. This technology not only avoids the release of dangerous gases but is also more efficient, using less electricity than open furnaces. Chromite lump ore, pellets, carbon, quartz and lime stone are mixed in a pre-calculated composition. The material mix is fed into the furnaces where the ferrochrome alloy is produced via a reduction process of the chromite ore to elemental chrome.
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South African Chrome Industry
Position Paper
March 2014
The casted alloy from the furnaces is crushed and screened to different sizes according to customer specification. This alloy is then transported to South Africa's main ports by road or rail for export to stainless steel producers around the world. Current production of 267 400 t/y ferrochrome is being achieved. LANXESS Chrome Mining (Pty) Ltd On surface the broken ore is processed to yield chemical concentrate, the raw material for LANXESS’ chrome chemicals plants in Newcastle and Argentina, lumpy ore and metallurgical concentrate, the raw material for the ferrochrome industry as well as foundry sands which is used in metal foundries. The chemical concentrate is transported to the Newcastle plant for further refinement in the value chain for the production of tanning materials. The lumpy ore, metallurgical concentrate and foundry sands are sold into the ferrochrome market. The Newcastle plant specialises in the production of chrome chemicals. The plant essentially produces sodium dichromate which is used in the manufacture of chrome tanning salts, pigment, and a number of other products. The plant also converts some of the sodium dichromate into chromic acid which is used in the metal finishing (electroplating) industry. The majority of the sodium dichromate is transported to the Merebank site for the production of chrome tanning salts used in the leather tanning industry. Tharisa Chrome The Tharisa mine involves the extraction of chromitite ore from the Middle Group Chromitite layers, which contains both PGMs and chrome. Tharisa Minerals, the operator of Tharisa mine, has leased and upgraded a dedicated rail siding located 6km from the Tharisa mine for the transportation of chrome concentrate by rail. PGM concentrate and chrome concentrate are produced from the ore by means of two integrated processing facilities that use a similar process: the Genesis Plant with a processing capacity of 100ktpm and the Voyager Plant with a processing capacity of 300ktpm. As at 31 December 2012 the processing facilities at the Tharisa mine had achieved steady state processing at a rate of 400ktpm of ROM ore and the Group was in the process of ramping up to steady state production which is expected to be completed during the 2014 financial year. Arxo Metals, a 100% owned subsidiary of Tharisa (Cyprus) owns the Challenger Plant for the production of chemical and foundry grades of chrome concentrate, which are higher grade chrome products with more stringent specifications, greater market value and higher margins than the metallurgical grade chrome concentrate produced by the Genesis and Voyager Plants. Production at this facility is on a relatively small scale. The Company’s subsidiary Arxo Logistics manages the Group’s logistics operations, including rail and road distribution of PGM concentrate and chrome concentrate produced by the Tharisa mine to customers in South Africa and to port facilities in Page 17 of 21 SSI Holdings (Pty) Ltd
South African Chrome Industry
Position Paper
March 2014
Richards Bay and Durban for shipment to overseas customers by bulk carriers and containers. Chromex Mogale Alloys, located in Krugersdorp in Gauteng, was purchased by the Ruuki Group, a Finnish company listed on the Helsinki and London stock exchanges, in mid-2009. Ruuki came into the transaction as the nominee of Kermas Limited, which made the initial offer for Mogale Alloys. Mogale Alloys is 84.9% owned by Ruuki South Africa, a wholly owned subsidiary of the Ruuki Group with the balance held by black empowerment partners. The smelting facilities comprise four existing furnaces which produce low-phospor ferrochrome, low-phosphpor silico manganese and stainless steel alloys with an annual capacity of 110 000 tonnes of ferro-alloys. Mogale comprises only processing facilities, without the security of a chrome ore supply, which is procured from several sources on short-term contracts. Mogale’s facilities are being expanded through the installation of ferroalloy refining and granulation equipment which will enable a significant portion of the current ferrochrome production to be converted to granulated medium-carbon ferrochrome. Planned completion of this expansion is end 2014. This expansion will enhance the opportunity to provide high priced speciality ferrochrome products into mature markets. Current production levels at Mogale Alloys would be maintained during the implementation phase. ASA Metals (Pty) Ltd At the smelter processing facility, charge chrome is produced through a single stage process by smelting a mix of chromite, reductant and fluxes at temperatures in excess of 2000°C. Electrical energy, required for the chemical reactions to occur, is supplied to the SAFs, through Söderberg electrodes. The molten waste slag and metallic charge chrome are continually (every 2 to 3 hours) drained from the smelting furnaces and separated in skimmers. The metal ingots are allowed to cool down before a final crushing and screening beneficiation step is performed that allows for the production of sized charge chrome. The stockpiled charge chrome is then supplied to international stainless steel manufactures.
4. Industry Analysis 4.1 Strengths - South Africa has the largest chromite reserves in the world at about 70%; - The country is the largest producer at 75% of ferrochrome worldwide for the export and local markets; Page 18 of 21 SSI Holdings (Pty) Ltd
South African Chrome Industry
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Position Paper
March 2014
Investments by international mining companies thus creating job opportunities; Underground mining technology expertise, mechanised high seam and scraper low seam mining methods, is recognised as being in the forefront of chromite extraction; Beneficiation of the chromite concentrate to charge chrome results in high grade products in demand worldwide; and Construction of CDM compliant electricity cogeneration plants utilising the waste gases.
4.2 Weaknesses - Beneficiation facilities are remote from the mining operations resulting in high transport costs of chromite concentrate; - Lack of the final beneficiation process by some chromite producers impacts negatively on the country’s potential export earnings as well as giving competitors marketing advantages; and - The delay in issuing New Order Mining Rights by the Department of Mineral Resources hampers mine development in times of bullish product prices. 4.3 Opportunities - Increased production of high quality charged chrome will increase South Africa’s export earnings thus having a positive effect on the balance of payments: increased credit rating potential; - Elimination of competitors through increased production of charged chrome into the market place; and - Construction of on-site smelting facilities to decrease the input costs (transport) of chrome concentrates into the beneficiation process. 4.4 Threats - Fluctuating international chrome prices makes mine development planning risky; and - International investment ventures into the chrome industry for the benefit of the investors’ home country, e.g., Chinese investment to export chromite concentrate to China for ferrochrome production at Chinese smelters.
5. Conclusion South Africa holds about 70% of the world’s total chrome reserves. It has reserves of about 3.1 billion tonnes and a further estimated resource of 5.5 billion tonnes (circa 2011). The country produces 75% of the world’s ferrochrome for the local and export markets. As a result of the country’s abundant resources and reserves of chromite ore, numerous international mining and investment companies have developed chromite ore mines and beneficiation facilities. This has been enhanced South Africa’s foreign direct investment position. In addition employment opportunities have been created. There are two major chromite /ferrochrome production companies:
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South African Chrome Industry
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Position Paper
March 2014
Glencore/ Merafe Resources Joint Venture The biggest producer of ferrochrome globally which has an annual production capacity of 2,3 Mt/a. All the chromite ore is produced from its own mines on the eastern and western limbs of the BIC and beneficiated in its nearby smelting facilities. Chromite resources and reserves can support the above planned capacity for in excess of 100 years.
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Samancor Chrome The second largest producer in the world has estimated chromite resources of 650Mt which equates to proven and probable reserves of 16,6Mt and 23,4Mt respectively. It has two mining centres in the Eastern and Western limb of the BIC with capability of producing 1Mt/a of charge chrome from three smelting operations, with Ferrometals being one of the largest ferrochrome plants globally.
In addition there are a number of medium to small ferrochrome producers (< 500ktpa) established with international finance on both limbs of the BIC. The majority of these producers have on-site smelting plant facilities. There will be, according to CRU Consulting (CRU), the management consulting division of the CRU Group, strong and stable growth in the stainless steel industry over the next 20 years and the demand for stainless steel, which ultimately drives demand in the chrome ore market, will increase primarily due to increased demand from China and India. There is accordingly scope for South Africa to increase its primary chrome ore production considerably. Despite a decrease in chrome concentrate prices from 2011 to 2012, CRU believes that there will be a price recovery over the medium-term, with steady annual increases in prices thereafter. The graph below depicts the forecasted demand for ferrochrome to 2035.
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South African Chrome Industry
Position Paper
March 2014
6. References The following references are acknowledged in the compilation of this position paper: -
Annual Report 2012 of Xtrata/Merafe Resources Joint Venture Ltd Assore Ltd Annual Report 2012 International Ferro Metals (Pty) Ltd Annual Report 2012 Mining Weekly and Miningmx Bulletins on Lanxess, Chromex, Samancor Chrome and ASA Metals Tharisa website LANXESS website
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