Zimbabwe Annual Min ining Conference 31 May 2019 MAXIMIZING - - PowerPoint PPT Presentation

Zimbabwe Annual Min ining Conference 31 May 2019

MAXIMIZING GROWTH, BENEFICIATION AND VALUE ADDITION OF THE FERROCHROME INDUSTRY

FEEDBACK FROM THE INTERNATIONAL CHROMIMUM DEVELOPMENT ASSOCIATION (ICDA) CONFERENCE Presented by

John Musekiwa

CEO-Zimasco Chairman-the Confederation of Ferrochrome Industries of Zimbabwe (CFeCrIZ)

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Disclaimer

This presentation is for information purposes only . Whilst the information contained herein has been prepared in good faith, neither Zimasco (Private) Limited (the “Company”), or the Confederation of Ferrochrome industries in Zimbabwe (the “CFeCrIZ”) nor any of the directors,

• fficers, employees, agents or advisers of the Company or CFeCrIZ makes any representation or

warranty in respect of the fairness, accuracy or completeness of the information or opinions contained in this presentation and no responsibility or liability will be accepted in connection with the same. The information contained herein is provided as at the date of this presentation and is subject to updating, completion, revision, verification and further amendment without notice. The presentation materials contain forward-looking statements in relation to the subject matter. By its very nature, such forward-looking information requires the Company and CFeCrIZ to make assumptions that may not materialise or that may not be accurate. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the control of the Company and CFeCrIZ that could cause the actual performance or achievements to be materially different from any future results, performance or achievements expressed or implied by inclusion of forecasts. Nothing in this presentation should be construed as a definitive forecast.

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Presentation Outline

• Chromium Flowchart
• Overview and current status of the Zimbabwe Chrome Industry
• Chrome Ore
• Ferrochrome
• Beneficiation of Chrome in Zimbabwe
• Future Status
• Requirements for the Growth of the Industry
• ICDA Feedback
• Conference
• Market Outlook
• Conclusion

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Chromium world flowchart-Source Roskill

Metallurgical grade chromite is predominantly smelted to produce ferrochrome used in steel alloys (predominantly stainless steel). Small amounts of metallurgical grade chromite are used in the production

• f

chromium chemicals, foundry sands and

• refractories. End of life

material is recirculated as scrap, predominantly for stainless steel production

Overv rview of f Zimbabwe Chrome In Industry ry

72% 12% 5% 2% 1% 1% 7%

Global Distribution of Chromite Resources

RSA Zimbabwe Kazakhstan Finland India Turkey Rest of the World

Source: ICDA 2015

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Zimbabwe holds the world’s second largest chrome ore reserves, second only to South Africa. Global Resources estimated in excess

• f 12 billion metric tonnes

(Source Roskill : Chromium Global Industry Markets and Outlook to 2018, 14th edition)

Chrome Ore

• Chrome resources in Zimbabwe
• ccur in two forms which are

podiform & stratiform.

• Podiform deposits occur just off

the world famous geological feature stretching across Zimbabwe, namely the Great Dyke and are found in the Midlands and Mashava areas in the South of the country.

• Stratiform deposits (seams) occur

throughout the length of the Great Dyke from Guruve in the North down to Mberengwa in the South.

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Chrome ore- current status

• From the limited exploration, the known

chrome ore resources occur approximately 60% as lumpy (which is ideal for smelting) and 40% as friable ores or fines.

• Mining of the lumpy ore is carried out in large

part by semi-mechanised medium sized players and small scale miners from open pit

• perations. The near future will see an

increase in underground mines as the open - pittable resource is dwindling.

• Friable ores and fines are currently processed

via medium sized concentrator washing plants where material is upgraded.

• 2018 chromite ore production totalled 1.4

million tonnes, approximately 3.5% of global production.

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Ferrochrome

• The highest level of beneficiation of

chrome ore in Zimbabwe is production

• f ferrochrome
• Due to the good quality of its chrome
• re

resource, Zimbabwe largely produces Mid- High carbon ferrochrome (52-60% Cr). This is compared to charge chrome which is the main type of ferrochrome produced in RSA where the %Cr is typically 47-52%.

• Smelting

is energy intensive and electricity constitutes the highest production cost component in Zimbabwe

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Ferrochrome Current status

• Zimbabwe

currently has 14 ferrochrome

• perations

mainly concentrated in the Midlands Province with the larger players (Zimasco, Afrochine) utilizing medium sized furnaces and the smaller

• perations using small furnaces.
• Production in 2018 totalled 365 kmt,

which is around 2.5%

• f

global

• utput.

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Beneficiation of f Chrome in in Zimbabwe

• Chromium has no substitute in stainless

steel production, which is the back bone for all global economic growth, hence it is a strategic global commodity.

• With an estimated 12% of the global

chromite resources and its chrome ore and ferrochrome production currently contributing less than 3% to global

• utput, the Zimbabwean chrome ore

industry has significant potential for growth

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Chrome Ore –Future Status

• The increased ferrochrome capacity
• n line will see increased chromite ore

production in 2019 y-o-y of ~40% compared to 2018 (assumes adequate electricity supply).

• Future years will see chromite ore

production increase in line with the growth of ferrochrome production.

• Chromite ore exports in 2018 totalled

800 kmt.

• Government’s thrust is towards value

addition and beneficiation therefore future years will likely see a decrease in chromite ore exports as focus shifts to increasing ferrochrome production.

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594 891 1,358 1,901 2,367 2,874 3,141

• 500

1,000 1,500 2,000 2,500 3,000 3,500 2016 2017 2018 2019 2020 2021 2022

ZIMBABWE CHROMITE ORE PRODUCTION 2016-2022 ('000mt)

SOURCE MMCZ, CFeCrIZ

kmt

Ferrochrome –Future Status

• With new capacity already commissioned,
• utput is forecast to increase by 15% in 2019 y-
• -y to 419,000 mt.
• Resumption of operations at Zimbabwe Alloys
• n the back of refurbishments currently

underway, coupled with expansion of production from Zimasco will see output ramping up in the coming years

• As part of the roadmap to Tsingshan’s stainless

steel production in Zimbabwe by 2026, Afrochine, which is a subsidiary of Tsingshan (largest global stainless steel producer) will also expand its ferrochrome production going forward.

• The expansions will see Zimbabwe’s

ferrochrome production capacity rise to almost

• ne million tonnes (956 kmt) by 2022.
• The Zimbabwe ferrochrome Industry growth

path dovetails with Vision 2030.

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164 309 365 419 647 850 956 200 400 600 800 1000 1200 2016 2017 2018 2019 2020 2021 2022

ZIMBABWE FERROCHROME PRODUCTION 2016 -2022 ( '000mt)

SOURCE MMCZ & CFePIZ

kmt

Requirements for Growth of f th the Zimbabwe Chrome In Industry

Conducive environment / Policy clarity and consistency Access to Capital / Attraction of investment (domestic and foreign)

Further Exploration to increase knowledge and confidence in the grades and tonnages and to locate new ore bodies Innovation /new methods to tackle the mining of narrow seams on the Great Dyke

Introduction of newer more efficient smelting technologies Availability of affordable power for mining and smelting

Recapitalisation of the road and rail network Increased foreign currency retention for viability

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ICD Conference Feedback

• The International Chromium Development Association is The voice of the global chromium industry since 1984.

With more than 100 companies as members across the chromium industry value chain, the ICDA is the authoritative voice of the industry.

• 250 delegates attended the conference which, for the first time in its 35 year history was officially opened by a

Head of State (His Excellency E.D. Mnangagwa)

• 24 countries from across the globe were represented at the Conference which was an
• A day before the main conference a technical tour which was sponsored by Afrochine and Zimasco to see Afrochine

Ferrochrome smelter which has just commissioned two new furnaces was held. This was very well received . All the delegates gave enthusiastic feedback commending the organizers and were impressed with the Afrochine Smelter.

• Feedback from delegates on the conference was extremely positive. For most of the delegates it was a first-time in
• Zimbabwe. Delegates left with better knowledge of the Zimbabwe chrome ecosystem and many were planning to

return in the near future to look at investment opportunities

• ICDA believes that Zimbabwe should play a bigger role in ICDA and there must be regular information on local

developments

• A major common comment from traders was related to the need for transparency on pricing and export of chrome
• re via the MMCZ
• Delegates indicated that they would appreciate a conference in Zimbabwe in the next 3 years to assess

developments and opportunities.

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ICDA Feedback

• Market Outlook
• Due to uncertain global economic conditions arising from the trade wars esp.

between the USA and China, market expected to be bearish for the rest of 2019.

• The supply side of both chrome ore and ferrochrome is expected to significantly
• utstrip demand this year as the key global economies slow output due to the

prevailing uncertainties.

• Stainless steel growth which, in previous years, has been typically around 5% is

expected to slow to between 2-3% for 2019.

• The consumption of stainless steel scrap has increased especially in the developed

markets like USA and Europe and is also growing in China due to increased

• availability. This results in reduced consumption of virgin ferrochrome.
• There is expectation that there will be some cut backs in production from the key

ferrochrome producing nations of China and RSA in Q3 2019 and into Q4 2019, which should assist to rebalance the supply demand equation in 2020.

• Stainless steel growth forecast at between 2 - 3% p.a. for next the five years.

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Conclusion

Phenomenal Growth of the Zimbabwe Chrome Industry is possible Low cost of production is key, the resource we have, the market is there

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Thank You

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