Evaluating the price of different grades of chrome ore in South Africa

Abstract

The mining industry, being one of the largest industries in South Africa, is under review by investors due to the suggestions from the Department of Mineral Resources for revising the mining charter. There are growing concerns in the mining industry, should the revised mining charter be implemented. Although South Africa is a country rich in natural resources, these resources are imperishable and should be utilised as efficiently as possible. This study focuses on determining the equilibrium point between different concentrate grades in chrome ore. This is obtained using sales which varies with different grade of the input and waste material, with a specific focus on a gravitation wash plant. A literature review was performed on the biggest chrome importing country (China), as well as the biggest exporting country (South-Africa). The focus was then placed on chrome itself and its products, namely steel and stainless steel. The empirical study focused on using the formulas addressed in the literature study to create a tool by combining them, which will indicate the equilibrium point of the selling price. This was applied to different grades and historical prices to illustrate the turning point in operations for different chrome concentrates. It was evident from the empirical study that the lower the selling price, the more beneficial it is to produce a higher percentage concentrate. Vice versa with the higher the selling price for concentrate products, the better is, the lower percentage concentrate, even with higher grade feed. It is recommended that managers should use the model when a variable change, either in the plant or the sales price. The model will provide the answer if a change is needed in the product produced by the plant. Recommendation for future study is the effect the model have on related markets and the effect of Chrome VI on the model.