Zimbabwe Chrome Export Ban Under Pressure

Posted in Industry News on 6th December 2011 |

Smaller scale Zimbabwean Chrome ore miners have joined Zim Alloys in lobbying the government to lift the export ban on Chrome ore, because they do not have the sufficient smelting capacity or access to capital to develop new smelters. Consequently, there is now an increasing stockpile of Chrome ore in Zimbabwe with nowhere to go.

Chrome ore exports were banned in late 2009, because the Zimbabwean government argued that the country was not earning maximum value from its significant chrome ore reserves. After appreals fro producers, the ban was lifted again in March 2010 to give Chrome producers until April 2011 to set up their own smelters. However, although producers such as Zim Alloys attempted to secure financing for benefication projects, this has not been succesful due to a number of factors, including global economic uncertainty and Zimbabwean government policy which has deterred foreign investment.

Zim Alloys is the third largest Chrome producer in Zimbabwe with two furnaces, each with capacity to produce 10,000 tonnes per month, but its operations have been curtailed since the country's economic crisis in 2008. The Company requires $ 18 million to refurbish these smelters and together with small scale miners is trying to make the government understand that this a capital intensive process that can take several years to bring new facilities up to full production capacity.

Wellington Takavarasha, CEO of Zimbabwe Miners Federation (ZMF) ias quoted as saying "Value addition is indeed the way to go and small-scale chrome miners are not opposed to it. However, we are saying government should give us more time to set up smelters while continuing with the export of raw chrome. Our members are already setting up consortiums to construct smelters because the costs are beyond the means of any individual miner."

It is reported that Chrome ore stockpiles are now at 30,000 tonnes and many small scale miners have halted operations until they can sell material again at economic prices. Unable to generate cash or secure finance it is difficult to see how the sector can meet the government's policy of value addition.

Currently, the country's only operational chrome smelter is run by the Chinese owned Zimbabwe Mining & Smelting Company (Zimasco) which produces approximately 50,000 tonnes of chrome per year. However small scale miners argue that Zimasco is in a dominant market position as the only buyer of chrome ore, paying prices far below the international market.

Of course, where there are major export bans and large borders it would be unusual not to see smuggling increase and there are reports that smuggling into South Africa and Mozambique is rife.

However, despite all the strong arguments against the ban, after recent statements from Deputy Mines and Mining Development Minister Gift Chimanikire it would appear that the Zimbabwean government refuses to compromise.

Zimbabw has 12% of the world's Chrome ore reserves but currently, only accounts for 5% of global production.

Tags: Africa, Benefication, Chrome Ore, Export Bans, Ferro Chrome, Mozambique, Resource Nationalisation, Smuggling, South Africa, Zim Alloys, Zimasco, Zimbabwe