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Export ban crippled chrome sector



WHEN the government slapped a ban on chromium ore exports in 2011 and 2021, the main purpose was to support the domestic ferrochrome industry through support of downstream mining companies while boosting the economy.


However, an analysis titled Export Restrictions on Minerals and Metals: Estimation and Analysis of Supply Chain Effects from Zimbabwe’s Chromium Ore Export Ban conducted by international economists Anna Perry and Samantha Schreiber of the United States International Trade Commission (USITC) has shown that the bans have weighed on the mining industry with a considerable decrease in production and chrome prices since the first ban in 2011.

In 2021, the government placed a ban on chrome ore exports to support the domestic ferrochrome industry, which saw a drop in chrome ore prices by 10.53% while the quantity of Zimbabwe chromium ore sent to downstream companies rose by 10.21%.

Ferrochromium production, and the quantity of total Zimbabwe chromium ore production fell by 42.67%, while the price of ferrochromium from Zimbabwe fell by 4.96%.

The quantity of Zimbabwe ferrochromium increased by 16.58%, while the price of Chinese ferrochromium rose by 0.82% and the quantity of Chinese ferrochromium production fell by 1.14%.

According to the analysis, Zimbabwean ferrochromium producers are estimated to receive a greater benefit from the export ban in 2021 in terms of larger estimated percent increase in ferrochromium production — about 16.6% in 2021 compared to 14.7% in 2011.

However, producers in China are estimated to experience a larger decline in production in 2021 (1.1% reduction compared to 0.8% reduction in 2011).

“Several factors explain these differences. First, the estimated chromium ore cost share in Zimbabwe ferrochromium production has increased in recent years, so changes in the chromium industry have larger impacts on the ferrochromium industry,” reads the analysis.

“Second, Zimbabwe contributed a larger share of world chromium production in 2020, producing 4.5% of total world production compared to 1.9% in 2010. Coupled with the fact that Zimbabwe exports roughly 50% of its chromium ore production in non-ban years, the 2021 ban is estimated to have a larger impact on global chromium and ferrochromium trade relative to 2011.”

The effects are also similar to those after the government placed a ban on chromium ore and concentrates exports to push domestic chromium ore producers to develop downstream production capacity for ferrochromium in 2011.

While the government gave producers 18 months to establish smelting capabilities, the ban, however, did not successfully spur downstream development, which saw chromium ore output decrease by 64.8%, and two major producers—Zim Alloys and the Zimbabwe Mining and Smelting Company (Zimasco)—shut down.

According to the analysis, the government lifted the ban in 2015 after no notable increase in smelted chrome production.

In 2016, the export value of chromium ore (HS 2610.00) from Zimbabwe rebounded and continued to increase for several years, peaking as the third-largest global exporter at US$94.1 million (3.5% of global export value) in 2018.

The findings have shown that downstream domestic ferrochromium producers increased their purchasing of Zimbabwean chromium ore by about 14.7%, while total chromium ore production in Zimbabwe decreased 45% as export destinations were no longer available to producers.

“This led to a price decrease for Zimbabwean ferrochromium (4.7%) and an increase in Zimbabwean ferrochromium quantity of production (15.2%) as more inputs were exclusively available and at a cheaper price, akin to a positive supply shift.

“Chinese ferrochromium producers, on the other hand, experienced a modest decline in production quantities (less than 1%) as relatively less chromium ore inputs were available.”

Zimbabwe’s chromium ore has an estimated average mineral content of 48%, which is priced at a premium relative to South African metallurgical grade concentrate. This higher content is ideal for ferrochromium processing, as ferrochromium contains between 50 and 70% chromium.

Global chromite production doubled in the last decade, largely due to capacity expansion of chromite mining in South Africa and Zimbabwe driven by chromium price spikes in 2016-2017 and rising ferrochromium and stainless steel demand.

In 2019, South Africa and Turkey accounted for roughly 38% and 22% of the 44.8 million metric tonnes of chromite produced globally, respectively, while Zimbabwe was the sixth-largest producer globally, with roughly 1.5 million metric tonnes of chromite produced, or 3.5% of the global total.

Chromium is a hard, gray metal mostly used in the steel industry as an alloying element because of its hardness and corrosion resistance. More than 95% of chromium consumption is in metallurgical applications.

Of metallurgical chromium demand, 78% is attributed to stainless steel production.

Ferrochromium, an alloy form of chromium, is essential in the manufacture of stainless steel, which has higher relative chromium content and — as such — corrosion resistance compared to other steel forms. Most stainless steel contains roughly 18% chromium and is required to contain a minimum of 10.5% chromium.

Niche chromium chemical and refined metal account for 3% of global chromium consumption, with downstream applications including leather tanning, metal finishing, wood preservatives, paints, and glazes.

Kazakhstan, South Africa, and India collectively hold nearly 95% of reported global reserves of chromium ore. However, Zimbabwe is reported to hold roughly 12% of global reserves of high-grade chromium ore, second only to South Africa.

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