Last week, Project Blue visited the heart of the chromium ore industry in the Bushveld region and met with various mining companies and stakeholders. 

In 2023, South Africa achieved record chromium ore exports despite logistical challenges caused by Transnet Freight and Port Authorities. The increase in exports responded to renewed growth of Chinese ferrochrome production after a three-year hiatus and consolidation, with China’s largest ferrochrome producer becoming the second largest globally in 2023, the first time a Chinese smelter enters the top three. The surge in ferrochrome production in China and logistic challenges in South Africa for chromite ores to reach Chinese ports, saw low port stock persist throughout the year and underpinned the longest consistent run of elevated prices for chromium ores, making it one of the best price performers in 2023. 

Producers of ore in South Africa are increasing the production of both primary ore and platinum group metal (PGM) by-product ore (known as UG2). PGM producers are making use of the high chrome ore price to counter the slump in the PGM market, or as much of it as possible. Based on Project Blue’s assessment of mine production in South Africa, exports suggest that mine-site stockpiles have been significantly reduced. With rail lines degrading in South Africa, around three-quarters of chromite was bound for port by truck in 2023, up from less than 65% two years earlier. 

In 2024, Project Blue anticipates a continued surge in Chinese ferrochrome production, with expectations for the country’s largest ferrochrome producer to become the largest producer by a significant margin. The outlook for stainless steel and ferrochrome is expected to maintain pressure on seaborne chromium units to China. South Africa will most likely remain the major source of chromite ores for Chinese smelters, pointing towards a need for record-breaking export figures year after year. Transnet will play a crucial role at port and logistical bottlenecks in the near and medium term. The PGM industry will also remain a crucial point, although cutbacks in mining are expected to target the Merensky Reef, to maintain upside of by-product chrome from the UG2.