CEH Report

Table of Contents

Abstract

Chromium chemical production begins with chromite ore production. Three countries dominated chromite ore production in 2006—South Africa (39%), Kazakhstan (19%) and India (17%). The next four largest are Turkey (4%), Zimbabwe (4%), Brazil (4%) and Finland (3%). Untapped chromite ore deposits are plentiful, but are geographically concentrated in South Africa and Kazakhstan. Six companies account for the majority of chromite ore production, and they are vertically integrated into metallurgical applications.

Most of the chromium ore consumed worldwide is used in steel production. Of the chromite ore produced, 92% is used by the metallurgical industry, and of that, 95% is used to make stainless steel. Chemical production and refractories and foundries each account for 4%.

Production of chromium chemicals typically accounts for about 5% of the total quantity of chromite ore consumed, or one million metric tons of all chromite ore. The past three years have seen the closure of smaller, less competitive producers in mature markets, as well as several Asian facilities closing for environmental and economic reasons, with China being a net importer of chromium chemicals. Tightness in the market allowed producers to raise prices by 20–40% from 2004 to 2006, necessitated by high energy, raw material and freight costs. The impact of price increases in 2005 was seen in 2006.

The majority of all sodium dichromate (SDC) produced is processed into three main marketable products: chromic acid, chromium sulfate and chrome oxide. Most of the remainder is used for pigment production. Global consumption of chromium chemicals, which had been slowly eroding for the past twenty years primarily as a result of environmental concerns, has begun to rebound.

The following chart shows production of inorganic chromium compounds by country as a percentage of world production:

Future growth in consumption of SDC and its derivatives is expected to be modest and fluctuate with GDP, largely driven by growth in Asia, Central and Eastern Europe, and South and Central America. New market entrants are unlikely and would encounter highly competitive process technology, high capital costs, substantial environmental risks, increasing scale economies, earnings cyclicality and advanced market maturity. China is the fastest growing region, but the Chinese government is attempting to reduce the number of small plants, replacing them with larger and more modern facilities, with improved environmental protection.