Arsalan Ali

Pakistan is endowed with vast reserves of chromite for the production of ferrochrome, but they remained untapped, causing the country to import this expensive alloy at the cost of hard-earned foreign exchange, reports WealthPK.

The latest report by the Trade Development Authority of Pakistan (TDAP) shows that the chromite sector presents a highly promising avenue for investment. The report highlights immense potential for growth in this sector, with significant opportunities for establishing a chromite processing plant to produce upgraded chrome, as well as a state-of-the-art ferrochrome production plant. The report states that at present, the raw chromite ore is priced at around $280 per ton, but with the transformation of this material into its value-added product, the potential for generating significant revenue is enormous. In fact, the final product – ferrochrome – can be sold for up to an impressive price of $4,145 per ton, representing a highly lucrative prospect for investors, it adds.

The latest report sheds light on the potential for ferrochrome production in the country. By utilizing the indigenous resources, the steel industry can benefit from a lower cost and larger quantity of raw materials, ultimately reducing the need for expensive imports of ferrochrome.  The report also recommends the Boston and Lasbela Special Economic Zones (SEZ) as ideal locations for establishing a ferrochrome production plant. Situated in close proximity to the key chromite-producing districts of Muslim Bagh, Khanozai, Nasai, Gawal, Wadh, and Sonaro, these locations provide an easy access to the CPEC routes for transportation of finished goods to the steel industry, which is located in various parts of the country, according to the report. It is worth noting that Pakistan has an abundance of natural resources.

The country has around 92 minerals, of which only 52 are currently being commercially exploited, the report says, adding that the country largely exports its minerals in raw form, with no substantive value-addition to date. The report suggests that the potential for value addition in the form of ferrochrome production represents a significant opportunity for investors looking to capitalize on the untapped potential of Pakistan's rich natural resources. The global market for ferrochrome, a highly sought-after alloy used in the production of stainless steel, is estimated at a staggering $11 billion. According to the report, the demand for high-carbon ferrochrome is significantly higher than that for low-carbon ferrochrome. The report cites data from the Trade Map, which reveals that the prices of high-carbon ferrochrome vary between $1200-$1400 per ton and that China is the leading importer of this valuable alloy.

Other major importers include Indonesia, Japan, Korea, the USA, and the UAE. When it comes to exports of high-carbon ferrochrome, South Africa dominates the global market as the leading exporter, followed by Kazakhstan, India, Finland, and Zimbabwe, it adds. With Pakistan's abundant reserves of chromite, the country is well-positioned to tap into this lucrative market and become a major player in the global ferrochrome trade, the report says. According to the report, South African ferrochrome dominates the global market in terms of price competitiveness. It offers an average price of $886 per ton, which is significantly lower than Kazakhstan's price of $1,699 per ton and India's price of $1,287 per ton. The price of low-carbon ferrochrome is relatively high compared to the high-carbon ferrochrome. It ranges between $2,500-$3,500 per ton, and the USA is the leading importer of this valuable alloy.

Other major importers include Korea, Japan, Germany, and India. When it comes to exports of low-carbon ferrochrome, Russia, Kazakhstan, Turkey, and Germany are the top exporters of low-carbon ferrochrome. According to the report, Russia offers a more competitive price for low-carbon ferrochrome at $2,461 per ton, compared with Turkey's $3,324 per ton and Germany's $3,691 per ton. The report also identifies Indonesia and Japan as the highly competitive markets for importing high-carbon ferrochrome, as both countries apply 0% tariff on these imports. Despite its significant reserves of chromite, Pakistan is not a leading importer of ferrochrome. The country primarily imports finished products of stainless steel, with limited quantities of high and low-carbon ferrochrome imported by a few select importers.

In 2021, Pakistan imported approximately $263,000 worth of high-carbon ferrochrome from South Africa, Vietnam, and Europe.

Credit : Independent News Pakistan-WealthPk