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SA cheap chrome ore threaten Zim mining sector


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– Sunday News  Jun 18, 2017

Munyaradzi Musiiwa, Midlands Correspondent
THE local chrome sector might fail to reach the projected annual target
output owing to plummeting chrome ore prices on the international market
as well as cheap quality chrome ore from South Africa that has flooded the
Chinese market.

In the past three months the chrome ore prices were hovering around $200
per tonne but have since fallen to around $90 per tonne due to the stock
piling of about two million tonnes by China which is the largest consumer
of the commodity at the moment.

The dire situation has been exacerbated by cheap chrome ore from South
Africa which is being exported to China much to the detriment of the
Zimbabwean mining sector which has the best grade of the mineral in the
world.

Vice-President Emmerson Mnangagwa recently announced that the country was
looking forward to generating $3 billion from mineral exports with chrome
expected to contribute 50 percent. This is however, threatened by falling
prices of chrome ore on the international market coupled with the cheap
South African minerals.

In an interview on the sidelines of the Gweru Chrome Miners Indaba in
Gweru last week, Mineral Marketing Corporation of Zimbabwe (MMCZ) deputy
general manager marketing Mr Masimba Chandavengerwa said the chrome mining
sector might plunge into that predicament for the next six months, a
situation which has scared potential buyers.

"The international market is affecting all suppliers of chrome ore mainly
because in China there are almost two million tonnes of ore reserves and
also from South Africa there is cheap low quality material coming from
there and until such a time that it has been moved you don't expect prices
to firm up in the short term but in about five to six months we expect the
market to start stabilising and also the prices," he said.

Mr Chandavengerwa said at the moment an average grade of chrome ore was
selling at $80 to $90 per tonne.

He said as a result buyers were not prepared to commit to the local market
thereby affecting the viability of small-scale miners whom he said were
not liquid enough to stock pile.

"On average the cost per tonne should be around $45 because these guys are
not mining deep. We think at those price levels it's still feasible. But
the unfortunate part is that the buyers are not prepared to commit because
they think the next six months prices will continue falling. So the market
has to stabilise first before we conclude deals with the buyers," he said.

He said to avoid stock piles of chrome ore as a nation there should be
mechanisms in place such as funding smelters so that they buy from the
small scale miners.

"If the small-scale miners are failing to sell on the international
market, they should have local smelters who should be looking for material
so that the small -scale miners are not prejudiced when the international
market is not buying. Small-scale miners can't stock pile for six months,
they need the money, they need to be paid on time," said Mr
Chandavengerwa.

Source: LINK

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