JOHANNESBURG (miningweekly.com) – South Africa’s chromite recovery potential has been broadened by Wednesday’s joint venture (JV) agreement between Glencore Operations South Africa and Sibanye-Stillwater.

“We’ll definitely extend our contract terms,” Glencore Alloys CEO Japie Fullard noted in response to Mining Weekly questions during a media conference that followed the presentation by Glencore plc of operationally strong 2024 results.

The chrome pooling and sharing venture with Glencore has entered into what was described in a Merafe Resources Johannesburg Stock Exchange announcement as a “mutually beneficial enhancement to the legacy agreement, as well as a new chrome management agreement with Sibanye-Stillwater.

Glencore is listed in London and Johannesburg and Sibanye-Stillwater is listed in Johannesburg and New York, while Merafe’s revenue and operating income are primarily generated from the Glencore Merafe Chrome Venture, which has a total installed capacity of 2.3-million tonnes of ferrochrome a year.

Earlier this month, Merafe advised that, through its chrome venture with Glencore, a ferrochrome smelting business review might result in the suspension of certain of its ferrochrome furnaces in May, and that work with regulatory authorities was under way to explore all viable alternatives in partnership with organised labour. Additionally, engagement with suppliers was under way to identify cost-saving measures to help improve the current situation.

The negotiated price agreement (NPA) obtained from State electricity utility Eskom last year is reportedly insufficient.

“For us to survive in terms of ferrochrome capacity in South Africa, we need, first of all, to have a better NPA tariff. And then from a governmental position, they have already approved the ore tax and if we do not have some sort of initiatives from government, it will make things extremely difficult for us to survive.

“So what do we need? We also need to be excluded, as the ferrochrome industry, from cross-border adjustment mechanism CBAM tariffs otherwise we’re going to be penalised even more, and what's going to put another burden on top of ferrochrome would be the carbon tax. Those would be the areas of relief that we would seek.” Fullard explained. CBAM is the cross-border adjustment mechanism.

South Africa, once the mainstay of global ferrochrome production, today supplies most of the chrome for China to produce ferrochrome, which is used to make stainless steel.

Mining Weekly: Are you aware of the new technology that is available that can cut electricity required for smelting by two-thirds?

Fullard: I can tell you that we are already in negotiations with the owner of this intellectual property (IP). We must all understand, though, that it's still currently at pilot project stage and is not yet commercialised, so we, as Glencore, are looking into partnership with the company that's got this IP and we’re aggressively looking at this as part of the solution. I can tell you, however, it's not a short-term solution, and will take time.

SMELTDIRECT

Fullard’s IP comment is almost certainly a reference to the promising new Proudly South African technology called SmeltDirect, which is positioned to take the greenness and cleanness of ferrochrome to a new level at a time when the likes of the CBAM imposition are not far off in a region where combatting climate change remains an essential requirement.

SmeltDirect promises to be on the receiving end of value from CBAM carbon credits, giving South Africa an open window of opportunity to regain lost ground with bottom-of-the-cost-curve competitiveness.

This new technology has been developed over the last 13 years by the Johannesburg Stock Exchange-listed African Rainbow Minerals (ARM), headed by executive chairperson Dr Patrice Motsepe.

At one stage, 20% of mining-related foreign exchange was earned from ferrochrome sales alone and there is now a growing conviction that with available new technology, South Africa could go all out to regain its lost market share during this period of new of public-private collaboration.

South Africa’s chrome value chain once provided more than 200 000 jobs. However, jobs have been progressively shed as South Africa’s ferrochrome industry, the beneficiation baseline of the chrome value chain, went into decline.

The point has been made that no reasonable competitive entity anywhere in the world could justifiably adopt the standpoint that it is not correct for South Africa, which hosts most of the world’s chromite ore, should not be entitled to add value to it in South Africa, which is already a producer of the stainless steel into which ferrochrome feeds.

ARM has already said that it stands ready to share its IP in a manner that is in the best interests of South Africa as a whole, which is to spread the patented SmeltDirect as far and as wide as possible by retrofitting it to the considerable number of dormant smelters.

Advantageously, SmeltDirect not only has all the attributes to reverse South Africa’s downward ferrochrome and ferromanganese slide but could even open the way for a return of the local production of other lost but greatly needed products such as high-manganese rail.

A detailed bankable feasibility study has been completed, engagement with ferroalloy peers on JV partnerships has taken place, and funding and co-financing arrangements for what will be a major generator of direct and indirect jobs are showing early promise.

Some 700 jobs are created for every 200 000 t of alloy production a year and South Africa was once a producer of about four- or five-million tons a year, which points to the potential of creating tens of thousands of new jobs.

Moreover, the use of renewable energy with biocarbon can slash Scope 1 and 2 carbon emissions by up to 80% and Scope 3 emissions are halved.

What must not be ignored is that SmeltDirect uses 70% less electricity, cuts costs meaningfully, slashes emissions and can make good use of the lowest of low-grade input materials.

Only 1.2 MW of electricity is needed to produce a ton of alloy, unlike the 4 MW required by conventional systems.

At one stage, installed ferrochrome capacity alone was 4.8-million tons. Getting back to that competitively would be of substantial benefit to the South African economy and should be implemented as part of a public-private programme. 

Knowledgeable visitors from around the world have given the fully operational SmeltDirect demonstration plant at ARM’s Machadodorp Works a firm thumbs up.

The strong belief is that if South Africans work together in a new return to local ferroalloy production, there is a potential for the country to return to being a valuable contender in competitive ferroalloy production.

SmeltDirect is able to process fines, slimes and carbonate manganese ore and ensure that large volumes of ore are able to leave the country in a beneficiated form.