Turkish Chrome ore has obvious advantages under carbon neutral commitment
----Interview with Yingjun Gui
Chief Representative of China
Turkey CVK Mineral
With 30-year experience in chrome ore mining, Turkey CVK Mineral Madencilik Nakliyecilik Ins. Taah. Ve San Tic. A.S. now mines chrome ore in Bursa in Northwest Turkey and Adana in South Turkey. Its monthly output of chrome lump is approximately 20,000t and that of chrome concentrate reaches 22,500t.
Asian Metal: Hello, Mr. Gui! Thank you for accepting the interview of Asian Metal. Please make a brief introduction about CVK Mineral.
Mr. Gui: With 30-year experience in chrome ore mining, CVK Mineral now plans to conduct all business ranging from mining to marketing through its own professional team. Owning mining licenses covering many regions in Turkey, the company now mines chrome ore in Bursa in Northwest Turkey and Adana in South Turkey. Bursa is located in the beautiful Marmara and usually produces approximately 10,000t of chrome lump and 2,500t of chrome concentrate per month, while Adana could produce close to 10,000t of chrome lump and 20,000t of chrome concentrate per month from September 2017. CVK Mineral also purchases chrome ore from other companies, piles it in warehouses in Mersin and Mudanya and finally exports it to China and other countries. Specifically speaking, about 95% of the material is exported to China.
Asian Metal: Could you please introduce to us the characteristics of chrome ore produced by CVK Mineral?
Mr. Gui: The chrome ore produced by CVK Mineral is characterized by high Cr:Fe ratio and high Mg:Al ratio. In particular, the Cr:Fe ratio and Mg:Al ratio of chrome lump is 2.8-3.2 and 2.5-4.0 respectively; the Cr:Fe ratio and Mg:Al ratio of chrome concentrate 46-48% is 2.3min and 1.8min respectively.
Asian Metal: Data released by China Customs indicated that China's imports of Turkish chrome ore declined in the recent years. What's the main reason for this in your opinion?
Mr. Gui: In view of the much low prices of ferrochrome, most domestic ferrochrome producers were more inclined to use South African chrome concentrate in the recent years to reduce production costs. Furthermore, Zimbabwean chrome concentrate occupied some market shares. Both of the two factors caused the decrease in China's consumption volume of Turkish chrome ore to some extent in the recent years.
Asian Metal: How will China's demand for Turkish chrome ore change in the future in your opinion?
Mr. Gui: We expect that China's demand for Turkish chrome ore would increase in the future against the backdrop of carbon neutrality. Some Chinese plants found recently that the recovery rate of Turkish ore is high, which means that more Chinese plants will use Turkish chrome ore. A large Chinese ferrochrome plant started changing its original formula in December 2020, raising the consumption volume of Turkish chrome ore from 15% to 30%. Chinese steel mills' mainstream purchasing prices for HC ferrochrome increased to RMB8,545/t (USD1,323/t) delivered D/P in April 2021, a level surpassing RMB7,000/t (USD1,083/t); meanwhile, the profits made by producing HC ferrochromeCr56-58% were higher than those made by producing HC ferrochrome Cr50-52%; besides, the freight of high grade chrome concentrate was lower than that of low grade chrome concentrate. Therefore, Turkish chrome concentrate gradually demonstrates it is more cost-effective.
Asian Metal: What's the influence brought by peak carbon emission and carbon neutrality on metallurgy industry?
Mr. Gui: The price of power generated by wind is usually competitive. In Inner Mongolia, a large metallurgy region in China with a sharp increasing speed of total consumption volume of energy in the recent years, the consumption volume of energy accounted for 5.2% of the national total, but the region contributed only 1.7 percent to the national economy. In the first half of 2020, the consumption volume of energy in most regions of China and the whole country showed a negative growth rate, but that in Inner Mongolia rose by 6.3% YOY with the energy consumption intensity up by 10.56% YOY. Inner Mongolia formulated policies to control the consumption volume of energy recently and closed small and medium-sized ferrochrome plants, showing that it already took the lead in carrying out peak carbon emission and carbon neutrality work. The energy consumption control policies in Inner Mongolia will last for a long period of time and tend to be increasingly strict in the future, which will stimulate other large consumption regions in China to follow suit.
Asian Metal: What are the advantages of Turkish chrome ore compared with other countries under current policy?
Mr. Gui: Metallurgy experts once said that when ferrochrome is profitable, reducing the consumption volume of South African chrome concentrate and increasing the consumption volume of other high Cr:Fe ratio chrome ore will increase the recovery rate, thereby increasing the output of ferrochrome and maximizing profits. As we all know, the increasing rate of chrome ore prices is much slower than that of ferrochrome prices, while the declining rate of chrome ore stocks is much slower than that of ferrochrome stocks. Under the current policy, the main producing region won't change in a short period of time, so we still need time to adjust prices to realize a balance between ferrochrome and chrome ore in both prices and stocks. For example, when prices of South African chrome concentrate and Turkish chrome concentrate show a same increasing degree, the metallurgical efficiency of ferrochrome will definitely be raised if we increase the consumption volume of Turkish chrome ore. In terms of the environmental protection policy, the consumption volume of South African chrome concentrate UG2, which has high Fe content, is also likely to drop. The Cr element and the Fe element of chrome ore belong to the same group of elements and their atomic weight is 52 and 56 respectively. In the process of metallurgical reduction of ferrochrome, both the Cr element and the Fe element will be reduced by C atom in coke, so if the Fe content is higher, more reducing agent carbon will be consumed and more carbon dioxide will be discharged accordingly. That is to say, the Cr content and the Cr:Fe ratio directly determine the consumption volume of carbon and we can realize low carbon metallurgy and improve metallurgical efficiency by using more high quality chrome ore. In addition, the Mg atom won't be reduced by carbon during the metallurgy of ore as its reducibility is stronger than that of C. The increase of the MG2O3/AL2O3 means the decrease of the consumption volume of carbon and the emission volume of ore slag and carbon dioxide (2Mg+CO₂= ignition = 2MgO+C). Therefore, the emission volume of carbon dioxide could be reduced by using more high Cr:Fe ratio and high Mg:Al ratio chrome ore.
Asian Metal: What's your expectation about the price trend of Turkish chrome ore in the second quarter this year?
Mr. Gui: As Chinese steel mills' mainstream purchasing prices for HC ferrochrome for May drop by RMB1,050/t (USD163/t) to RMB7,495/t (USD1,160/t) delivered D/P, ferrochrome smelters will cut their chrome ore purchasing prices to ensure profits. Prices for South African chrome ore show a downward trend now, which will stimulate Turkish chrome ore prices to drop. However, as chrome ore prices have been falling in April, there is only limited room for prices of Turkish chrome ore to drop further in the second quarter.
Asian Metal: Would you like to share with us the development plan of your company?
Mr. Gui: CVK Group will consider raising the chrome ore mining volume in other mining districts in the near future. CVK already invested a lot of funds and equipment in other mining districts in the past five years, planning to raise the export volume of chrome ore to 600,000tpy in the future so as to regain the former glory.
Asian Metal: Thanks again for accepting our interview. Wish your company a bright future!
