The majority of the chromite sent to China is a co- and by-product of PGM mining, mainly from the UG2 reef.

Already decades in the making

Chromite is found in nearly all regions, however, the Bushveld Igneous Complex in South Africa stands apart as the most significant source of the material that makes steel stainless. While being of a lower Cr:Fe ratio material compared to other sources of chromtite, the Chinese alloy and stainless industries have built their supply chain around South African chromite, which now accounts for over 80% of the feed to its smelters.

Of the chromite sent to China, the majority is a fine-grained variety produced as a co- and by-product of platinum group metal (PGM) mining, mainly from the Upper Group 2 (UG2) reef. Originally PGM miners discarded chromite in tailings, but over the last two decades, this source of by-product concentrates is reshaping the supply chain. UG2 chromite is the lowest-cost large-scale source of chromium and firmly occupies the entire lower quartile. Currently, only 17-25% of chromite is recovered from UG2 tailings with large quantities of chromite still unutilised in ultra-fines, but studies have shown successful improvements in recovery to capture additional value.

Implications of additional UG2 chromite

Certain flotation technologies are showing a 50-70% recovery of UG2 chromite. Project Blue estimates that improving recovery to 50% for all UG2 operations currently recovering chromite will add another 10Mtpy of chromite supply – equivalent to over 25% of the current global supply.

Being the lowest-cost source of chromium, UG2 chromite has carved out a growing market share. In order to consume growing volumes of UG2 chromite fines, ferrochrome producers have installed sintering and pelletising plants integrated with furnaces, which have the added benefit of improving the yields and recovery during smelting. With new smelters in China following suit and targeting chromite fines, the outlook for new capacity seems set to support more UG2 to come to the market.

Project Blue forecasts that the stainless steel industry will underpin an increase in demand of around 10Mtpy by 2050, equivalent to the entire upside potential of existing UG2 chromite operations today (with more upside above 50% recovery). This means that UG2 supply growth can accelerate well ahead of demand and cause substitution from other sources. The source most likely to be replaced in the short term would likely be primary South African chromite supply and other low-grade sources exported to China, while the rest of the world’s ores are largely integrated. Primary chromite miners in South Africa are gearing up to weather the potential flood of UG2 chromite, by looking at recovering by-product PGMs from their chromite operations and improving economics at the mines.