Tharisa locks in Chinese chrome supply contract
Chrome and platinum miner Tharisa secured a five-year supply contract for 240,000 tonnes of chrome concentrate a year to a Chinese customer as the market adjusts from an enormous inflow of illegally mined chrome from SA.
With prices recovering to above $200 a tonne after dropping to a year’s low of about $130 a tonne for chrome concentrate, the flow of about 1-million tonnes a year of illegally mined chrome from SA had largely dried up as the police and Department of Mineral Resources clamped down, said Tharisa CE Phoevos Pouroulis.
Illegally mined concentrate had a considerable effect on the market as volumes rose over 24 months to 1-million tonnes a year by the end of 2016, when chrome prices were double what they were now, he said.
With the volatility in chrome prices and varying demand from China, Tharisa has secured a supply contract with Chinese stainless steel maker Tisco to provide it with 20,000 tonnes a month of metallurgical chrome concentrate, with potential to rise to 30,000 tonnes.
Tharisa’s share price rose 7% on the news to R15.50.
The contract for concentrate sales at market prices represents a quarter of the 1-million tonnes a year of chrome concentrate Tharisa produces at its mine near Brits in the North West. Growth in sales to Tisco to 30,000 tonnes a month would take that figure up to a third, giving the two parties certainty in a volatile market, said Pouroulis.
“The co-operation agreement further cements our position in the Chinese market and underpins our order book. It is also encouraging to note that spot chrome prices have increased above $200 a tonne on the back of improved stainless steel production,” he said.
Tisco has a 700,000 tonnes a year ferrochrome plant that generates 300,000 tonnes a year of ferrochrome, the material that goes into the production of stainless steel. Tisco is planning an expansion of the plant to add 50% more ferrochrome to its production. Tisco makes 4million tonnes a year of stainless steel and needs 1-million tonnes a year of ferrochrome.
At steady state, Tharisa produces 1.3-million tonnes of chrome concentrate, of which 300,000 tonnes is made into speciality-grade chrome, and 147,000oz of four platinum group metals.