Samancor Chrome expected to be sold to Chinese entity

While it was a long time coming, it now looks like Samancor Chrome will finally be sold to a Chinese stainless mill in the near future with assistance of China’s Silk Road Initiative which encourages investment in overseas raw material suppliers.

This deal is expected to be transformational for the ferrochrome industry. Samancor is the world’s second largest ferrochrome producers operating four smelting operations, Ferrometals, Middelburg Ferrochrome, Tubatse Ferrochrome and TC Smelter. The four units have 18 charge chrome furnaces with an installed capacity of producing more than 1.6-million mtpy of charge chrome. Technology deployed is 12 open Submerged Arc Furnaces (SAF) with four closed submerged arc furnaces and two Direct Current (DC) furnace at MFC.

And, just as important, if not more important, Samancor has two chrome mining divisions (Eastern and Western). The typical production levels amount to about 3-million mtpy of saleable chromium ores for both internal consumption and local and export sales, thought to be around 700,000 mtpy of which all goes to China.

With the purchase, China will have more control not only imported chrome ore but also ferrochrome. “The Chinese will not only be able to set the ferrochrome buying price but also the ore price,” one seller predicted.

Other charge chrome producers, notably Glencore, may have to reorient their sales to the other regions. The effect on high-carbon ferrochrome producers and high-grade miners will be much less.

Analysts suggest the sales price will be less than $1-billion.

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