Why China’s ferrochrome better than South Africa’s?

The ratio of alloy to ore produced in South Africa has changed dramatically since 2005. This ratio has dropped from 0.32t alloy/t ore in 2019 to 0.18t set.

Ferrochromium production per ton of ore in South Africa, 2005-2019 (Source: ICDA-Statistical Bulletin).

During the period 2005-2019, approximately 95 million tonnes of unprocessed iron ore (“FeCr”) were produced in South Africa. Assuming 10% of the complex ore used for non-ferrochromium applications, this equates to a ‘loss’ of ferrochromium production in South Australia of about 37 million-tonne per liter of alloy demand.

Ferrochromium manufacturer

       Ferrochromium manufacturer

1. Demand growth in China

China’s stainless steel production capacity increased from 8.6 million tons in 2008 to 30.7 million tons in 2019. Increased demand for ferrochrome has driven growth in South African exports of ore, particularly UG2, which is produced cheaply as a by-product.

China’s dramatic growth has taken South Africa’s leading ferrochrome manufacturer by surprise. They are not prepared to keep up with the necessary expansion.

Typical timelines for new products, including environmental impact assessments, etc., put them at a disadvantage. To make matters worse for South Africa, the expansion of China’s ferrochrome industry is proving to be challenging in terms of starting energy in the form of a serious reduction in the burden.

2. Chinese ferrochrome craftsmanship is similar to South Africa

Most of the new capacity added in China in recent years has been large enclosed thermal furnaces equipped with OTOTEC pelleting and sintering machines, similar to the technology used in South Africa.

3.China’s ferrochrome production costs are lower

In the current freight market, the logistics disadvantage of Chinese chain iron producers is about $125.00 per ton of ore, while the logistics disadvantage of SA ferrochrome producers is about $125.00 per ton. Assuming 23,000 tonnes of ore per tonne of alloy, this equates to a logistical disadvantage of $162.50 per tonne of alloy, or 0.147 cents per pound for the chromium contained in the alloy. Last year, however, the Chinese sold ferrochrome for less than $0.8 a pound and below the cost of production in South Africa.

4. Electricity determines the cost of production

South Africa is doing itself no favors by allowing the export of cost-variable ore (ie, ore) to Chinese refineries. China’s ferrochrome industry has survived so much that it has overtaken South Africa as the world’s leading producer. This is in the context of rising electricity prices for smelters in South Africa, a variable for local producer costs.

5.Demand for ferrochromium increases

The forecast shows that the demand for gridiron will increase by about 2.5 million tons in the next 7-10 years, of which a critical amount will be abroad. Given that China is a net importer of ferrochromium, it is realistic to assume that any demand outside of China must come from regions with chromium resources, namely South Africa and Kazakhstan (to a lesser extent).
It is unlikely that the ore will be processed entirely in South African facilities, but the intent must always be to process as much as local resources allow. According to the definition of nameplate capacity, about 1.2 million tons of facilities per year are currently not in use. The mining tax and its impact on alloy prices will likely act as a catalyst to improve efficiency to some extent and bring back most of the dormant capacity.

Lishi Industrial Ferrochromium

Lishi Industrial Ferrochromium


Anyang Lishi Industrial Co., Ltd is specialized in the production, trading and innovation of Ferrochromium for welding, foundry, refractory, steel, and other metal-related industries. Lishi Industrial covers an area of 45,000 square meters, with state-of-the-art production equipment, a factory laboratory and a testing center to ensure customers the first quality products. Serving more than 200 customers in America, Germany, Mid-east, Russia, Spain, South Africa, Southeast Asia and etc.


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