Glencore said it was working with the government to find solutions to the chromium market's predicament

Glencore Alloys CEO Japie Fullard said in an interview with Mining Weekly, "We are working with the government to find possible solutions," noting that all of their ferrochrome smelters were suspended, including their world-class Lion smelter—although it was expected to resume operations after current maintenance, it might not do so this year. Japie Fullard stated, "We will obviously invest where we can get the most value. So currently, we are evaluating between chrome ore exports and ferrochrome exports, and the value of chrome ore exceeds that of ferrochrome." However, the value of ferrochrome should be five times that of chrome ore, so exporting ferrochrome should bring in huge profits and create a large number of jobs. Shutting down all smelters is not beneficial for South Africa. 

They are seeking possible solutions:

(1) The first real short-term solution must be to obtain cheaper electricity, allowing us to continue benefiting.

(2) To control exports by curbing illegal mining that is currently happening.

(3) To enter special economic zones and provide tax relief.

The interview content is as follows:

1. When Engineering News & Mining Weekly last spoke with you, there was hope that African Rainbow Minerals' new low-energy SmeltDirect technology could restore local ferroalloy production, especially ferrochrome production, to competitiveness. Is there still hope for that?

Fullard: We are studying this technology in detail. We are working with African Rainbow Minerals, and their technology is definitely a good solution in terms of efficiency. But even with this solution, it requires a significant amount of capital investment, and due to the uncertainty of electricity prices and power supply in our current environment, investment will be extremely difficult. We did test this technology. We believe that with a lot of additional testing work, it could work. However, in the absence of certainty, it is not feasible to spend a large amount of money on something that we are not yet 100% sure about.

2. In terms of pricing, what kind of price agreement needs to be reached with Eskom to get these smelters operating again?

You will know that a cabinet statement issued on June 25 specifically mentioned ferroalloys, but actually ferrochrome, because I can tell you that our competitors and friends in South Africa, Samancor, are in the exact same situation as us. I think they have used up 4 out of 24 furnaces, so it is clear that what we need is cheaper electricity. I can tell you that the reason we are not competitive is that if you look at China, their electricity prices are more than half lower than our current electricity prices. Therefore, we need electricity prices that are more than half cheaper so that we can start up and be competitive again.

3. You mentioned that the power supply also needs to be consistent. We've already gotten rid of load shedding, haven't we?

I think we have, because a considerable amount of smelting capacity has been shut down. I must be honest and say that if you look at Eskom's performance, their efficiency is definitely improving. As far as I know, they're now close to 70%, up from a base of 48%, so Eskom has definitely made progress. However, if we and Samancor were to reopen all the furnaces, we'd be talking about an additional energy consumption of over 2 gigawatts, which would obviously put tremendous pressure on the energy grid again.

4. Can't SmeltDirect ensure that the impact of the Carbon Border Adjustment Mechanism (CBAM) tariffs on South African ferrochrome disappears?

I don't think it will disappear, because remember, you'll still be using Eskom's energy to convert chrome into ferrochrome, so the CBAM won't disappear, but the impact will be smaller on a per-tonne-megawatt basis. If I just look at places like Lion, I can tell you now that there's no technology with a lower per-tonne-megawatt than the Lion complex. In terms of per-tonne-megawatt reduction, SmeltDirect looks pretty good, but it won't be zero, and it will still exceed 1 megawatt per tonne. But the technology is definitely there. It's been proven to work. But I think in this uncertain world, spending money on something that hasn't been 100% tested yet isn't going to happen. We're doing pilot tests, but we still need to focus on actual commercialization.

5. Can SmeltDirect handle chrome powder, slime, and carbonate. Will these wastes be sufficient to reduce the demand for chrome ore by chrome ore mining companies, thus generating interest?

I'm not sure about carbonate. I think in this case, you're referring more to the manganese aspect of things. But even with SmeltDirect, fines still need to be concentrated, and by the way, it won't get rid of scrap. You still need a certain quality of chromite content in your product - it must still contain 40% chrome content, and it won't remove the waste, so it's not a technology that converts waste into product.

6. It's been proposed to tax the export of raw chrome ore to ensure that there's enough ore for beneficiation into more valuable ferrochrome. An agreement couldn't be reached to ensure that the raw chrome ore needed for South African ferrochrome is supplied by the companies that mine the chrome, and then the rest can be exported. What's your view on this?

They did talk about a chrome tax, and obviously we feel we need a mechanism; what that mechanism looks like, we don't know yet. But I think it's very dangerous to enter a mechanism that could actually harm the entire industry. It's important to understand that any chrome ore tax could be a blunt tool, so we don't know if it will be effective, and it's not something we're lobbying for.

7. Do you have a mechanism in mind?

I can tell you that it's an extremely complex mechanism, and we're studying it. But without this mechanism, we won't support any quotas or any ore taxes, because we don't know what impact this will have on the rest of the industry. Yes, we might be able to save South Africa's beneficiation, or we might be able to save the ferrochrome industry, but doing so shouldn't harm the interests of non-integrated producers, because that's not the way to do it. You can't punish some companies for the benefit of your own company. The solution must be based on market-related supply and demand relationships, so at this stage, we don't have a mechanism.

8. When South Africa exports beneficiated alloys, South Africa gets more money, which is an excellent national incentive. Of course, there should be some vigorous activities to ensure that everyone benefits. Is there anything in the world that can be followed that will be beneficial to South Africa and all other relevant parties?

Your comment is very valid. If you look at beneficiated products like ferrochrome, it's five times the value of chrome ore, so exporting ferrochrome is huge in terms of the country's revenue. That's the first thing. The second thing is, if you look at labor and job creation, beneficiation is really the cornerstone, so shutting down all the smelters would really do a huge amount of harm to the country. Very importantly, if you look back 20 years ago, South Africa couldn't keep up with the stainless steel industry's demand for ferrochrome, and that was the problem. All of us started exporting chrome ore because we couldn't beneficiate in South Africa. In a perfect world, we should continue to benefit and continue to grow the ferrochrome industry. But we didn't do that because we didn't stick to the path of power growth. For example, if you compare us to Zimbabwe, Zimbabwe chose a total ban. Now, in South Africa, you can't do that, because if you impose a ban in South Africa, it means all the other non-integrated producers can't export their ore, so that's impossible, and we also can't convert in South Africa. If you do have the ability to convert chrome ore into ferrochrome, it's a good concept, but we can only convert 4.5 million mt of ferrochrome, because producing 4.5 million mt of ferrochrome requires 9 million mt of chrome ore—two tons of chrome, one ton of ferrochrome, which reduces logistical constraints, so if we mine more, we'll bring in more revenue for South Africa. We will have better logistical access, so it's a huge advantage, but we must never harm the interests of others.