ZIMASCO says there is need for extensive exploration so more chrome ore bodies can be identified to enable cost-effective mining of the thin chrome ore seams of the Great Dyke.
BY TARISAI MANDIZHA
The chrome ore industry has been facing a growing number of challenges since the global financial crisis of 2008 that saw the plummeting of prices of chrome ore and ferrochrome.
In emailed responses to NewsDay, Zimasco general manager (administration) Clara Sadomba said the downward trend had continued since then against rising production costs.
Sadomba said most chrome ore is now mined from the “difficult- to-mine, labour-intensive” thin seams of the Great Dyke because the large podiform-type chrome ore deposits have been largely depleted.
“The infrastructure that transports both the raw materials and the finished products is in urgent need of recapitalisation as unnecessary costs are incurred in using the ailing road and rail networks.
“The cost of production is adversely affected through use of alternative expensive power sources due to numerous power cuts in mining. More modern cost-effective furnaces that can utilise fine ore in the smelting process are also needed to enable effective utilisation of the chrome ore resource as the current furnaces can only utilise lumpy ore. Again this new technology requires significant capital, which is difficult to access at the present time,” Sadomba said.
She said the main global destination for chrome ore exports is China, but due to the slowdown of the Chinese economy this year, global commodity prices, inclusive of chrome ore, had been adversely affected.
“With other countries like South Africa which has the largest global chrome ore resources, also exporting significant quantities of chrome ore to China, it therefore follows that supply is currently outstripping demand,” Sadomba said.
“This means that while Zimbabwean chrome ore can be exported to the Chinese market, the price that the ore can fetch in that market will be depressed.”
She said it was important that the local cost of production and the logistics to get the ore to China from Zimbabwe was closely managed and be “as low as possible to ensure that a margin can be made when the chrome ore is sold”.
Government recently lifted the ban on the export of chrome ore of up to 30 million tonnes to enable the sector to mobilise financial resources and invest in technology Sadomba said Zimasco is yet to export any chrome ore as it was waiting for a response from the Ministry of Mines and Mining Development to its application for an export permit.
“Once exports commence, there will be additional revenue flowing into the fiscus from chrome ore sales and employment creation. However, it must be recognised that commodity markets are currently very depressed and prices of most commodities inclusive of chrome ore have continued to go down,” she said.
She said the export of chrome ore will provide an alternative revenue stream for Zimasco and other ferrochrome smelters.
“… at present, we note that one of the rules that has been expounded talks of smelters working towards operating at 100% of capacity. In that regard we can say that it will be very difficult for smelters to operate at 100% of capacity in a depressed and oversupplied market,” Sadomba said.