Chromium, nickel: Long-term plan for the Ring of Fire

Ontario, Canada

Progress on developing minerals in Canada’s Ring of Fire has been slow, mainly because of the need to establish access infrastructure to encourage exploration and exploitation in the remote region. In order to open up access to potential resources, a five- to ten-year construction plan is in place to build an all-season gravel road in collaboration with First Nation communities. Advances on completion of the road are expected to gain traction over the 2020s, as the USA and Canada collaborate to address critical raw material supply chains.

One company exploring the Ring of Fire is Noront Resources, which is targeting several resources. The company plans to develop its nickel Eagle’s Nest project first, which has the potential to attract investment from the electric vehicle (EV) industry for lithium-ion battery raw materials. Following on from nickel, Noront plans to focus on large chromium resources already identified in the Ring of Fire.

Roskill View

Chromium demand is underpinned by stainless steel and any large-scale development of chromium resources in the Canadian Ring of Fire will be tied closely to the regional development of ferrochrome and stainless steel production.

Global crude stainless steel production growth slowed in 2019 (Roskill estimates that production climbed by 4.2% compared to 5.1% in 2018). Most supply growth came from China and to a lesser extent Indonesia, with world supply from outside China declining by 4.6%. Roskill forecasts stainless steel demand to grow at 3-4%py over the 2020s, with demand expected to rise in all regions.

While the long-term fundamentals for chromium are expected to remain in place, the short-term outlook is weighing heavily on already low prices because of:

  • ample ore supply, predominantly from South Africa, which ramped up rapidly in 2017 and 2018 to feed hungry Chinese ferrochrome plants
  • increasing lower cost by-product chromium production from platinum group metal (PGM) mining in South Africa
  • growing ore and stainless steel inventories in 2019 overshadowing the ferrochrome market
  • the coronavirus and extended Chinese New Year prolonging low-price expectations for China-directed exports
  • stainless steel growth slowing to below 5%py

The main trade flow for chromium ores is that from South Africa to China, reflecting South Africa’s geological position in ore reserves and China’s ferroalloy investments over the past two decades.

Roskill’s Chromium: Outlook to 2029, 15th Edition report has its next market update due in March 2020. Roskill’s Nickel: Outlook to 2029, 16th Edition report is set to be published in March 2020. The reports outline supply, demand, trade and prices for both metallurgical and niche applications and analysis includes cost curves and price forecasts.

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This article was written by Nils Backeberg and Olivier Masson. Please get in touch below if you wish to discuss further:

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