Despite what happens to the ferrochrome price in SA CCI is not going to be affected.
The chrome ore that is mined yields three basic products, namely lumps, pebbles and fines. The fines are further processed and concentrated into metallurgical grade sand, chemical grade sand or various grades of foundry sand. The metallurgical grade sand is mainly used in the production of ferrochrome. Approximately 90% of the world's ferrochrome production is used in the production of stainless steel and South Africa is responsible for about 60% of total world production of ferrochrome.
Ferrochrome is not traded on a metals exchange, as is the case with other metals, mainly because of the different grades and qualities available. Ferrochrome is priced on a quarterly basis with approximately 85% of production being sold in terms of long-term supply agreements. The rest is supplied on a spot basis.
The non-metallurgical grade sands that CCI will be producing will be sold through an exclusive 2 year??? off-take agreement with companyXX for the SA economy (to be announced soon). This market is a niche market and will be very lucrative for CCI. Its also well documented that the bigger players are NOT focussing at this end of the market. Instead they are more interested in chasing the Chinese and European $$$$.
This is also another reason why CCI stands a good chance to get the mining license approved-because it will also benefit the local economy.
CCI Price at posting:
0.0¢ Sentiment: None Disclosure: Held
