LONDON, March 27, 2020 The spread of COVID-19 is now impacting ore and alloy operations globally. Logistical restrictions and reconsiderations of raw material requirements are becoming a headache for ore and alloy producers, as South Africa starts to lockdown and close borders.
Ore and alloy operations suspended as South Africa enters lockdown
Mining has been severely affected this week by respective lockdowns in South Africa and India.
On 23 March 2020, Cryil Ramaphosa, the President of South Africa, announced that at 23:59 26 March 2020 South Africa will go on a 21-day lockdown, in response to the escalating infections of COVID-19 in the region, halting all non-essential operations. CRU understands that mines and smelters will now all be put into 'care and maintenance' and that production will be stopped for that period.
While many miners are holding stocks, Transnet, a large South African rail, port and pipeline company, has issued a statement that neither trains nor bulk terminals in ports will be working due to a lack of labour. However, there is no clear signal what this means for vessels currently under loading operations in port, and if they will be allowed to finish. Furthermore, some miners have port stocks in Maputo, Mozambique, and as the virus spreads to Mozambique a lockdown could apply here in the coming weeks. Whilst, trucking to and from the border of South Africa is now being halted.
South Africa is the main source of chrome for Chinese FeCr smelters, with an average of 1.0-1.5 Mt of ore exported every month. In 2019, South Africa supplied 12.5 Mt of chrome ore to China or 80% of all Chinese imports. In China, smelters are gradually ramping up utilization rates as the COVID-19 curve has flattened. Chinese stocks of chrome ore at ports reached 4 Mt in late February due to disruptions in labour and logistics caused by COVID-19. However, stocks have gradually fallen to levels of 3.8 Mt since. A month without South African material will bring stocks down to levels around 3Mt. However, there is lots of ore on the water, which could minimize the decline over the next few weeks.
As South Africa steps up its efforts to combat COVID-19, Chinese chrome ore port stocks can only support the Chinese FeCr industry for 12.5 weeks at current operating levels. If disruptions to supply are elongated after the 21 day lockdown, it will pose an issue for FeCr smelting in China.
Read the full story:
https://www.crugroup.com/knowledge-and-insights/insights/2020/what-does-covid-19-mean-for-south-african-chromium-supply-and-logistics/
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