csm chrome ore set to soar

http://www.usail2.com/consolidated_takeover_updates.htm

Chromium Price Set To Soar
FN Arena News - March 06 2007

By Greg Peel
One of the side effects of the great Chinese commodity consumption surge is that we've all become a little bit more familiar with the periodic table. Once familiar metals and minerals began to leap in price, wily investors were quickly out looking for those lesser-known elements that might be next on the list.
You won't read an awful lot about chromite – the ore from which we derive chromium coating for steel – despite the everyday familiarity of chrome. As it is not used a lot in basic construction, it boasts nowhere near the popularity of that other leading steel coating – nickel. Chrome surfaces are actually manufactured by placing a microfine coating of chromium over a nickel layer.
But chromium is nevertheless yet another element coveted by the Chinese in their economic surge, and now the subject of a lot of consternation from two of the world's major sources of chromite.
South Africa has 72% of the world's known chrome reserves, and is the world's number one producer of ferroalloys (of which ferrochromium is one) producing 41%. Beneficiated (processed) chrome is about ten times more valuable than unbeneficiated chrome, so there is a significant incentive to keep control of the beneficiation process when you own all the chromite. Apart from the price difference, the smelting industry is a good employer and that's a problem South Africa constantly faces.
Nevertheless, a company by the name of Kermas has upset the "local" chrome industry by directly exporting raw chromite to China and supposedly undermining the value of the industry in South Africa. Kermas bought Semancor Chrome last year from BHP Billiton (BHP) and Anglo American. Most peeved was Xstrata-Merafe which has lost 16% of its chromium market share due to direct exports.
In 2005, raw chromite exports to China from South Africa totalled 760kt. In 2006 this figure reached over a million tons and the trend has only been up.
So in response, the government is planning legislation to ban the export of raw chromite.
This move follows similar measures by India, another major chromite source, which is planning a US$45/t levy on the export of raw chromite for the same reasons. Most of India's chromite exports go to China.
As the developing world catches up the mature economies, the adjustments are often painful (and South Africa is counted amongst the developing nations, despite its mineral wealth). Having been raped and pillaged for generations, these countries are carefully balancing social costs against the free market, despite such moves being against the tide of globalisation. India, for example, has just clamped down on a newly opened futures exchange in the belief that speculation is pushing up prices.
While Xstrata-Merafe may be a major beneficiary of the South African initiative, CEO Steve Phiri told Mining Weekly Online that "our mineral resources belong to all the people of South Africa and by exporting raw chromite we are destroying jobs".
How long developing nations can hold out before the Chinese simply come in and offer huge incentives, as they have done throughout a lot of Africa recently, is a case in point. But what is no doubt a given is that the price of chromium will be forced up in the meantime.
Australian investors looking for exposure to chromite might care to take a look at Consolidated Minerals (CSM).