Ferrochrome prices strong, availability tight
Ferrochrome prices strong, availability tight

20 February 2023 – Supply of ferrochrome and chrome ores remains tight, keeping prices high. Indonesia has a growing dilemma with its nickel. And ArcelorMittal collects Western tax billions for decarbonisation and even wants to increase CO2 emissions tenfold in India?

Ferrochrome prices continue to get support from tight availability

Ferrochrome supply remains tight. Not only is the availability of chrome ores limited, but also the production of many Asian ferrochrome producers is significantly reduced.

Turkey important chrome ore supplier

In addition, the severe earthquake in Turkey is putting even more pressure on chrome ore production. Turkey is one of the most important chrome ore producers in the world with a share of 16.9%. The large Aladağ Chrome Ore Mine in Adana province is one of the most important chrome deposits in Turkey and is located in the earthquake zone. China, for example, buys almost one million tonnes of chrome ore per year from Turkey.

Upward price pressure for ferrochrome likely to continue for the time being

Overall, price pressure on chrome ore and ferrochrome is likely to remain for the time being. Prices have increased by about 55% in recent years. After two very strong peaks in 2021, ferrochrome prices had recently moved sideways. In the meantime, however, they have gained significant momentum again – especially due to scarce availability. This indicates an upward trend with regard to the upcoming ferrochrome benchmark prices for the second quarter of 2023.

Nickel mining: The Indonesian dilemma

Indonesia is facing a growing dilemma. In addition to problematic conditions for miners, which recently led to riots with two deaths, domestic nickel mining is also heavily criticised for not being particularly sustainable, let alone environmentally friendly or green.

Massive environmental problems in Indonesian nickel mining

More and more land is falling victim to nickel mining, and the sea around the Indonesian island of Maluku Province is polluted. The nickel smelters are largely powered by coal. All in all, there is massive damage to the environment, which is more likely to increase than decrease. A problem for importers from the West – especially with regard to batteries for electric vehicles. A problem for environmentally sensitive European buyers.

The Inflation Reduction Act of the US government, which among other things provides high tax benefits for electric vehicles, could mean another problem for Indonesia. It requires a large percentage of battery production to be done in the United States.

Laterite nickel ore deposits lose quality

But this might not be the only problem for Indonesia and nickel mining there. Until now, Indonesia had the great advantage of being able to fall back on nickel ores that had a relatively high nickel content of 1.99% on average. These laterite nickel ores can be easily extracted in open-cast mines. And they are finite. We had already reported on this. In 2022, the Indonesian government was still saying that the high-grade nickel ores could be depleted by 2031.

High-grade nickel deposits only from deep mines?

But what then? Higher-grade deposits could be extracted in deep mines, as Nornickel in Russia does, for example. But the example of the Philippines shows that in the monsoon season the open-cast mines there fill up with water and this always has a huge impact on the availability of nickel ores in China. Deep mines are a challenge even without monsoon-like rains – see the water inundation in the two Russian Norilsk mines in 2021, from which the company has still not recovered.

This raises the question of what happens if the quality of laterite nickel ores should decline even further? Will it still be possible to economically mine nickel ores and process them into high-quality nickel?

Is ArcelorMittal playing dirty with decarbonisation?

The world’s second largest steel producer, the ArcelorMittal Group, is facing growing criticism over its expansion and decarbonisation plans. For example, while the group is heavily courting subsidies for its decarbonisation efforts in the European Union and Canada, and has just received a go from the European Commission for €500 million in government funding from Germany and Spain, the group continues to rely on dirty steel production in India with the BOF/BF route.

Will Indian steel giant increase CO2 emissions tenfold?

In Gujarat, India, ArcelorMittal wants to expand production to 15 to 20 million tonnes per year – with coal-fired blast furnaces. Which, if they go into operation as planned, could easily outstrip ArcelorMittal’s CO2 emission savings in Europe by a factor of ten. [https://www.netzeroinvestor.net/news-and-views/arcelormittals-faces-questions-over-two-speed-decarbonisation]

Missing plan wastes tax billions

But the main thing is to throw a few billion in taxpayers’ money down the throats of European governments, supported by the EC, while the overexploitation just continues outside Europe. So much for sustainable steel, green aspirations and real pressure on EU steel producers. Keep it green on your own doorstep, sweep the dirt out – e.g. to India.

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