Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Several chrome producers in South Africa, including Glencore-Merafe chrome JV, Samancor Chrome, and Tharisa have declared force majeure on contracts, as the country headed towards a nationwide lockdown till April 16. South Africa has imposed mandates which required all underground mines and furnaces to stop activities in compliance with the government’s measures to restrict the spread of COVID-19. Producers have placed their machinery and equipment under care-and-maintenance until the production restarts.

Glencore’s chrome JV in South Africa with Merafe Resources declared force majeure on qualifying contracts. Glencore has 79.5pc stake in the JV with a ferrochrome annual production capacity of 2.3mn mt.


Samancor Chrome mines and melts chrome ore and has an annual production capacity of about 1.2mn mt of ferrochrome and chromite ore. Samancor also announced force majeure due to its inability to fulfill a few of its pending contracts on forced production cuts.

Tharisa, a chrome and platinum producer announced that it had received force majeure notifications from its platinum group metals (PGM) concentrate sources. The company declared force majeure on its contracted chrome concentrate sales agreements, also due to insufficient mining activity to meet contracts. 


Jubilee Metals, another chrome producer, closed production and cleared its onsite inventory to reduce outstanding contractual commitments and limit effects on customers if it deems a force majeure move is necessary in the future. Jubilee Metals has not yet claimed inability to fulfill any of its contracts.

South Africa is the world’s largest producer of chrome ore, an essential raw material for the production of stainless steel. In 2019, China’s 83pc or 12.5mn mt of chrome imports came from South Africa. This accounts for 35pc of the global chrome supplies. Global chrome supplies are estimated at 36mn, with 64pc or 23 million produced in South Africa. South African production of chrome is expected to decline by 6-7pc from the previous year due to the lockdown unless production is accelerated in H2 2020.

According to media reports, while China will receive fewer shipments given the halted operations by most of the large South African chrome producers, stainless steel producers in China have approximately three-months of material, or about 4mn mt or 11pc of global supplies, piled at ports. The dampened demand for stainless steel products in 2020, not only in China but also in the EU and the US resulting from the economic slowdown from COVID-19 is expected to temper price fluctuations despite limited production.

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