Chrome rakes in US$100m - Zimbabwe Situation

Chrome rakes in US$100m

Source: Chrome rakes in US$100m | Herald (Business)

Ishemunyoro Chingwere Business Reporter
HIGH carbon ferrochrome exports have registered a 35 percent jump in the first quarter of the year compared to 85 000 tonnes produced the same period last year, earning the country US$100 million, according to official statistics.

The industry has continued to heed President Mnangagwa’s call not to export unbeneficiated chrome.

The first four months of the year saw the Minerals Marketing Corporation of Zimbabwe (MMCZ) shipping out 115 000 tonnes of high carbon ferrochrome compared to 85 000 tonnes last year.

Statistics from MMCZ show that the exports also earned the country US$95,5 million up from US$84,9 million, which signifies a 12,4 percent increase in monetary value.

The jump in value added high carbon ferrochrome exports has cushioned the industry against depressed global market prices.

Low prices have been attributed to imbalances in chrome and chromium supply versus low demand coupled with global trade wars as well as an alleged scheme by some international players to suffocate prices for end users’ benefit.

These global developments call for the sector to heed Government’s call for value adding raw materials before exporting them.

President Mnangagwa has set the Mines and Mining Development Ministry a target to grow its earnings from US$3,2 billion achieved last year to US$12 billion by 2023 as an anchor to Vision 2030 by which Zimbabwe should be an upper middle-income status economy.

In an interview with The Herald Business on Friday, Mines and Mining Development Deputy Minister Polite Kambumura, attributed the increase to an agreement chrome sector players struck with Government that saw the latter parking a proposed 2 percent beneficiation penalty.

“I am sure you aware that initially as Government we had introduced a 2 percent beneficiation penalty tax for all the chrome that was being exported as concentrates or lumpy but the miners came to us and asked that we suspend the penalty,” said Deputy Minister Kambamura.

“Their reasoning was that they wanted to capitalise on profits so that they can then build base metal refineries and we agreed to this on condition that in the meantime they have to show serious commitment to beneficiation.

“So what you are seeing are the results of that engagement and the President’s call to beneficiation and going forward you will see even more of it,” said the Deputy Minister.

MMCZ general manager Mr Tongai Muzenda, said the increase in ferrochrome exports had a co-relation with a decline in concentrates and lumpy exports which registered a 52 percent decline but was quick to note that it made more business sense to export value added ferrochrome.

Chrome concentrates and lumpy exports in the first four months of the year registered a sharp decline from 285 300 tonnes to 186 800 tonnes.

“The increase in ferrochrome exports has a direct relationship to the decrease in chrome concentrates and chrome lumpy exports, so most of the chrome concentrates are going into ferrochrome production,” said Mr Muzenda.

“Also there is no real point, while prices are going down, for miners to sale chrome ore, it’s better to sale internally, you probably reduce your logistics costs and probably get a better value assuming you have negotiated well with ferrochrome producers.

“. . . prices are still coming down on chrome ore on the international market,” he said.

Information at the Ministry of Mines and Mining Development shows that most of the ferrochrome production in Zimbabwe is largely low grade high carbon ferrochrome with typical chromium content of 52 to 60 percent.

In 2018, Zimbabwe contributed 2,5 percent of global ferrochrome output, which stood at 14, 32 million tonnes but this year targeting to grow its annual contribution by 20 percent to 418 000 tonnes and early indications are that the target could be achieved or even bettered.

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