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Mining Iron Ore and Chrome South Africa

Mining of Iron Ore and Chrome Industry in South Africa 2019

Alex Conradie | South Africa | 15 November 2019

Mining of Iron Ore and Chrome Industry in South Africa 2015

Alex Conradie | South Africa | 20 November 2015

Mining of Iron Ore and Chrome Industry in South Africa 2015

Alex Conradie | South Africa | 29 July 2015

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Introduction

During 2018, South Africa produced 74.3 million tons (Mt) of iron ore and 17.9Mt of chrome ore, making the country the sixth-largest and largest producer respectively, according to the United States Geological Survey (USGS). Data obtained from the International Trade Centre’s Trade Map shows that iron ore exports in 2018 amounted to 63.4Mt, earning US$4.2bn, while 12.4Mt of chrome ore valued at US$1.9bn was exported. According to the Minerals Council South Africa, 18,613 people were employed by the iron ore mining sector in 2018, while the chrome ore mining sector had 18,935 employees. Rapidly rising input costs and policy and regulatory uncertainty are some of the challenges faced by the iron ore and chrome ore mining sectors.

Strengths

• In 2018, the average iron content of Kumba’s ore was 64.5%, compared to figures ranging between 64.1% and 57.7% for its main competitors.
• Kumba Iron Ore’s main competitive advantage is its high lump-to-fine ratio, which was 68:32 in 2018, while the global average was 20:80.
• Some local ferrochrome companies are among the lowest-cost producers in the world.
• South Africa has world-class ferrochrome manufacturing facilities boasting state-of-the-art technology.
• South Africa holds 36% of the world’s chromite reserves.
• South Africa is the world’s largest exporter of chrome ore and ferrochrome.
• South Africa is the world’s largest producer of chrome ore and the second-largest producer of ferrochrome.
• South Africa is the world’s third largest exporter of iron ore.

Weaknesses

• Demand for chrome ore and ferrochrome is heavily reliant on demand for stainless steel, which is largely determined by economic conditions.
• Demand for iron ore is heavily reliant on demand for crude steel, which is largely determined by economic conditions.
• Ferrochrome sales to China are impacted by exports of chrome ore from South Africa, which is enabling the growth of the ferrochrome industry in China.
• Shortage of skills in certain disciplines.
• Since South African iron ore producers are small compared to the dominant companies, they are price-takers rather than price-setters.

Opportunities

• Demand for higher-grade iron ore is increasing in China.
• Expected growth in demand for both chrome ore and ferrochrome due to increasing stainless steel production.

Threats

• Added costs in the form of the carbon tax.
• Continuing uncertainty regarding South Africa’s mining regulatory framework.
• Lower world economic growth leads to decreased demand for iron ore and chrome ore.
• Rapidly increasing production costs, in particular electricity, water and labour costs.

Outlook

Iron Ore\r\nAccording to Australia’s Resources and Energy Quarterly report, global trade in iron ore is forecast to decrease by 4.2% in 2019 to 1,529Mt, before increasing to 1,568Mt in 2021. As production from Vale and Australia increases over the next two years, the seaborne market is expected to become oversupplied, due to lower steel production and increasing scrap usage in China. The price of iron ore is therefore forecast to drop to US$61 per ton in 2020 and US$57 in 2021, from an average of US$80 in 2019. Kumba Iron Ore is targeting iron ore sales volumes of between 43Mt and 44Mt for 2019, compared to sales of 43.3Mt in 2018.\r\n\r\nChrome\r\nAccording to KPMG, world stainless steel supply is expected to grow from 48.4Mt in 2017 to 57.7Mt in 2022, while the demand for ferrochrome is forecast to increase up to 2022. Merafe Resources expects the current surplus in the ferrochrome market to decrease or turn into a deficit as a result of a decline in output in certain countries in the next 12 months. This should lead to an increase in prices. The expected increase in demand for ferrochrome should lead to growth in chrome ore demand and, consequently, chrome ore prices. \r\n

Mining of  Iron Ore and Chrome Industry in South Africa
Mining of Iron Ore and Chrome Industry in South Africa 2019

Full Report

R 1 900.00(ZAR) estimated $105.85 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 74.09 (USD)*

Historical Reports

Mining of Iron Ore and Chrome Industry in South Africa 2015-11-20

R 1 900.00(ZAR) estimated $105.85 (USD)*

View Report Add to Cart

Mining of Iron Ore and Chrome Industry in South Africa 2015-07-29

R 1 900.00(ZAR) estimated $105.85 (USD)*

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Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Value Chain 1
2.2. Geographic Position 4
3. SIZE OF THE INDUSTRY 6
4. STATE OF THE INDUSTRY 8
4.1. Local 8
4.1.1. Trade 13
4.1.2. Corporate Actions 15
4.1.3. Regulations 17
4.1.4. Enterprise Development and Social Economic Development 21
4.2. Continental 22
4.3. International 23
5. INFLUENCING FACTORS 30
5.1. Economic Environment 30
5.2. Labour 31
5.3. Mine Safety 33
5.4. Environmental Concerns 34
6. COMPETITION 35
6.1. Barriers to Entry 37
7. SWOT ANALYSIS 38
8. OUTLOOK 39
9. INDUSTRY ASSOCIATIONS 39
10. REFERENCES 39
10.1. Publications 39
10.2. Websites 40
APPENDIX 1 - SUMMARY OF NOTABLE PLAYERS 42
Mining of Chrome and Production of Ferrochrome 42
Mining of Iron Ore 45
COMPANY PROFILES - MINING OF CHROME AND PRODUCTION OF FERROCHROME 47
AFARAK GROUP OYJ 47
ANGLO AMERICAN PLATINUM LTD 51
ASSORE LTD 55
BAUBA RESOURCES LTD 59
EASTERN PLATINUM LTD 63
GLENCORE OPERATIONS SOUTH AFRICA (PTY) LTD 66
IMPALA PLATINUM HOLDINGS LTD 70
JUBILEE METALS GROUP PLC 75
LANXESS CHROME MINING (PTY) LTD 79
NORTHAM PLATINUM LTD 81
SAMANCOR CHROME LTD 86
SIBANYE GOLD LTD 89
THARISA PLC 95
THUTSE MINING (PTY) LTD 99
COMPANY PROFILES - MINING OF IRON ORE 101
AFRIMAT LTD 101
ASSMANG (PTY) LTD 107
ASSORE LTD 111
KUMBA IRON ORE LTD 115
MANNGWE MINING (PTY) LTD 119
PALABORA COPPER (PTY) LTD 121
SEDIBENG IRON ORE (PTY) LTD 124
STRATA AFRICA RESOURCES (PTY) LTD 126

Report Coverage

The report on the iron ore sector describes the current market, outlines developments within the sector and focuses on factors influencing the success of the local industry. The report also profiles six companies, including Kumba Iron Ore which in July 2015 announced the decision to close its Thabazimbi mine after a review of its operations. Other players profiled include Assmang, Palabora Copper and the vertically integrated steel and vanadium producer Evraz Highveld Steel and Vanadium which initiated voluntary business rescue proceedings in April 2015 and in July 2015 announced a temporary halt to its mining and steelmaking operations.

Introduction

This report focuses on the mining of iron ore in South Africa where the minerals haematite and magnetite are exploited for their iron content. During 2014 the South African iron ore mining sector produced 78 million tonnes (Mt) of iron ore, according to the United States Geological Survey (USGS), while Trademap figures show that 67.2Mt of iron ore worth US$6.7bn were exported. According to the latest figures statistics from the Department of Mineral Resources (DMR), more than 21,000 people were employed by the iron ore mining sector in 2013. Challenges faced by this sector include unreliable and reduced electricity supply, falling iron ore prices, and rapidly escalating production costs.

Strengths

• South Africa is the world’s third largest exporter of iron ore.
• South African lump iron ore gains a premium in the market due to its excellent physical strength and high iron content.
• The largest iron ore producing companies are well-established in South Africa.

Weaknesses

• Capacity constraints on the Sishen Saldanha Iron Ore Export Channel limit producers’ ability to increase exports.
• Shortage of skills in certain disciplines.
• Since South African iron ore producers are small compared to the dominant companies, they are price-takers rather than price-setters.
• South African producers are situated further from the port and further from China than producers in Australia, leading to higher transportation costs.
• South Africa’s mining regulatory framework is complex and contains many uncertainties.
• The industry is heavily reliant on demand from crude steel production which is largely determined by economic conditions.

Opportunities

• Increased import duties on steel products should lead to lower imports and increased local production of those products, leading to higher local demand for iron ore.

Threats

• Implementation of a carbon tax.
• Low iron ore price.
• Lower world economic growth leads to decreased demand for iron ore.
• Rapidly increasing production costs.
• The lack of consistent and reliable electricity supply.

Outlook

According to Australia’s Department of Industry and Science, global trade in iron ore is forecast to increase by 1.5% in 2015 to 1,379Mt, and by 3.0% during 2016 to 1,420Mt. The department also estimated that Australia’s exports of iron ore will grow to 824Mt in 2016 from 762Mt in 2015 while those of Brazil will increase to 412Mt during 2016 from 390Mt in 2015. These two countries will account for a combined 87% of the global seaborne iron ore trade in 2016 from an estimated 84% in 2015. Kumba Iron Ore is targeting iron ore export sales volumes of 43Mt for 2015, alongside the 6,25Mt contracted to AMSA. Assmang is planning to export 14Mt of iron ore during its 2016 financial year. Australia’s Department of Industry and Science further forecast that China’s imports of iron ore will increase slightly to 936Mt in 2015 and to 950Mt in 2016 due to a drop in domestic iron ore production and a rise in the use of seaborne iron ore in steel making. Kumba Iron Ore estimated that global crude steel production would grow comparatively slowly at a compound annual growth rate of 2.8% from 2013 to 2018 while Anglo American forecast that the global surplus in iron ore would increase to almost 150Mt by 2017.\r\n\r\nIron ore prices will average US$52.9/t in 2015, dropping to US$51.2/t by 2016, according to Australia’s Department of Industry and Science. Kumba Iron Ore sees little prospect of iron ore prices increasing for at least five years. To meet the challenges of still lower prices the company plans to increase production and to fully utilise the available rail capacity while keeping its iron ore above an average of 64% iron content and its lump to fine ratio around 67:33. This makes its iron ore more attractive to customers, especially in an over-supplied market, which helps to improve its realised prices. The company expects that these measures will enable it to retain its market share and increase its sales volumes despite the challenging market conditions.

Read More..
Mining of  Iron Ore and Chrome Industry in South Africa
Mining of Iron Ore and Chrome Industry in South Africa 2015

Full Report

R 1 900.00(ZAR) estimated $105.85 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 74.09 (USD)*

Historical Reports

Mining of Iron Ore and Chrome Industry in South Africa 2019-11-15

R 1 900.00(ZAR) estimated $105.85 (USD)*

View Report Add to Cart

Mining of Iron Ore and Chrome Industry in South Africa 2015-07-29

R 1 900.00(ZAR) estimated $105.85 (USD)*

View Report Add to Cart

Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Value Chain 1
2.2. Geographic Position 3
3. SIZE OF THE INDUSTRY 3
4. STATE OF THE INDUSTRY 5
4.1. Local 5
4.1.1. Corporate Actions 7
4.1.2. Regulations and Government Programmes 8
4.1.3. Enterprise Development and Social Economic Development 12
4.2. Continental 12
4.3. International 13
5. INFLUENCING FACTORS 15
5.1. Government Support and Intervention 15
5.2. Labour 17
5.3. Economic Environment 18
5.4. Information Technology 20
5.5. Environmental Concerns 21
5.6. Mine Safety 21
5.7. Power Supply 22
5.8. Technology, Research and Development (R&D) and Innovation 22
6. COMPETITION 23
6.1. Barriers to Entry 24
7. SWOT ANALYSIS 24
8. OUTLOOK 25
9. INDUSTRY ASSOCIATIONS 26
10. REFERENCES 26
10.1. Publications 26
10.2. Websites 27
COMPANY PROFILES 28
ASSMANG (PTY) LTD 28
EVRAZ HIGHVELD STEEL AND VANADIUM LTD 32
FERRUM CRESCENT LTD 36
KUMBA IRON ORE LTD 39
PALABORA COPPER (PTY) LTD 42
SEDIBENG IRON ORE (PTY) LTD 45

Report Coverage

The report on the Chrome sector describes the current market, outlines developments within the sector and focuses on factors influencing the success of the local industry. The report also profiles nine companies, including the world’s largest ferrochrome producer Glencore Operations South Africa (Pty) Ltd, which employs 9,500 people at its seven chrome mines and five ferrochrome plants, and the second-largest producer, Samancor Chrome, which owns two mines and three ferrochrome plants.

Introduction

This report focuses on the mining of chrome ore, also known as chromite, in South Africa. Chromite contains the elements chromium and iron and is the sole commercial source of chromium. During 2014 the South African chrome mining sector produced 15 million tonnes (Mt) of chromite and exported 7Mt of the material worth US$1.1bn, while employing more than 18,000 people in 2013. Challenges faced by this sector include unreliable and reduced electricity supply, falling prices, rapidly escalating production costs, and the impact of strikes. As well as rising productions costs, South African ferrochrome producers have to deal with low ferrochrome prices they have to agree to because their steel mill customers cannot afford higher prices.

Strengths

• Local companies are among the lowest-cost producers in the world.
• South Africa has world-class ferrochrome manufacturing facilities boasting state-of-the-art technology.
• South Africa holds more than 41% of the world’s chromite reserves.
• South Africa is the world’s largest exporter of both chromite and HC ferrochrome.
• South Africa is the world’s largest producer of chromite and the second-largest producer of ferrochrome.
• The largest chromite and ferrochrome producing companies are well-established in South Africa.

Weaknesses

• Ferrochrome sales to China are impacted by exports of chromite from South Africa, which is enabling the growth of the ferrochrome industry in China.
• Shortage of skills in certain disciplines.
• The industry is heavily reliant on demand from stainless steel production, which is largely determined by economic conditions.

Opportunities

• Expected growth in demand for both chromite and ferrochrome due to increasing stainless steel production.
• Ferrochrome production and exports can be increased if production costs can be lowered or at least maintained.
• The EU’s anti-dumping duties on stainless steel from China should result in increased European demand for South African ferrochrome.

Threats

• Implementation of a carbon tax.
• Low ferrochrome price.
• Lower world economic growth leads to decreased demand for chromite and ferrochrome.
• Rapidly increasing production costs.
• South Africa’s mining regulatory framework is complex and contains many uncertainties.
• The lack of consistent and reliable electricity supply.

Outlook

According to Merafe Resources, world stainless steel production is expected to grow by 5% in 2015 and 2016, while the demand for ferrochrome is forecast to increase by 8.3% and 5.1% in 2015 and 2016, respectively. The apparent consumption and demand for stainless steel is forecast to grow, at least till the end of 2016.\r\n\r\nThe expected increase in ferrochrome production will lead to growth in chromite demand and, consequently, chromite prices. The resultant higher production costs for Chinese ferrochrome producers should result in higher ferrochrome prices, while the European Union’s recently imposed anti-dumping duties on stainless steel from China should result in increased European demand for ferrochrome and also put upward pressure on ferrochrome prices. Should prices not increase, the ferrochrome producers globally will come under severe pressure because of production cost increases. According to International Ferro Metals, growth projections beyond 2015 show that additional ferrochrome production will be required and that chromite availability will present a challenge because of a stagnant chromite supply pool and a lack of investment in new mines. Ferrochrome production levels in South Africa are expected to stabilise around the 4Mt per annum level going forward as most local producers are operating at optimal production levels.

Read More..
Mining of  Iron Ore and Chrome Industry in South Africa
Mining of Iron Ore and Chrome Industry in South Africa 2015

Full Report

R 1 900.00(ZAR) estimated $105.85 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 74.09 (USD)*

Historical Reports

Mining of Iron Ore and Chrome Industry in South Africa 2019-11-15

R 1 900.00(ZAR) estimated $105.85 (USD)*

View Report Add to Cart

Mining of Iron Ore and Chrome Industry in South Africa 2015-11-20

R 1 900.00(ZAR) estimated $105.85 (USD)*

View Report Add to Cart

Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Value Chain 2
2.2. Geographic Position 3
3. SIZE OF THE INDUSTRY 5
4. STATE OF THE INDUSTRY 7
4.1. Local 7
4.1.1. Corporate Actions 9
4.1.2. Regulations 10
4.1.3. Enterprise Development and Social Economic Development 13
4.2. Continental 13
4.3. International 14
5. INFLUENCING FACTORS 17
5.1. Government Support and Intervention 17
5.2. Labour 17
5.3. Economic Environment 19
5.4. Rising Input Costs 20
5.5. Information Technology 21
5.6. Environmental Concerns 21
5.7. Mine Safety 21
5.8. Power Supply 22
6. COMPETITION 22
6.1. Barriers to Entry 24
6.2. Research and Development (R&D) 24
6.3. Innovation 25
7. SWOT ANALYSIS 25
8. OUTLOOK 26
9. INDUSTRY ASSOCIATIONS 27
10. REFERENCES 27
10.1. Publications 27
10.2. Websites 28
ORGANOGRAM 29
COMPANY PROFILES 30
ASSMANG (PTY) LTD 30
DILOKONG CHROME MINE (PTY) LTD 33
GLENCORE OPERATIONS SOUTH AFRICA (PTY) LTD 35
HERNIC FERROCHROME (PTY) LTD 40
INTERNATIONAL FERRO METALS (SA) (PTY) LTD 43
LANXESS CHROME MINING (PTY) LTD 46
MARICO CHROME CORPORATION (PTY) LTD 48
RUSTENBURG MINERALS DEVELOPMENT COMPANY (PTY) LTD 50
SAMANCOR CHROME LTD 52