Dr. Gerhard C. Pariser Heinz H.

Pariser Alloy Metals & Steel Market Research

Chromite & Ferrochrome - A Focus on Asia

March 2011

Outline

I.

Global Markets

II. China Stainless Super Power & FeCr Converter

III. South Africa Ore Supplier or FeCr Producer?

IV. India The Next Boom Market?

V. Outlook & Conclusions

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

Global Markets

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

Chrome The Essential Element

Firts Use of Chromite Ore 2010
Chemical 3%
Foundry Sands 6%

First Use of Chromium Alloys 2010

Foundries & HSLA Castings 1% Tool & HSS 3% 1% Engineering Steels 6%
Carbon & Low Alloy 16%

Refractory 2%

Special Alloys * 1%

Metallurgical 89%

Stainless Steel 72%

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

Economic Growth drives Stainless

35.0
Global Stainless Steel Consumption in Mill t
30.0

Stainless Steel
2006 2007

2010

25.0
20.0

2011

2008 2009

15.0
10.0

5.0
0.0 1968

Corr: 0.99

0.0

20.0

40.0

60.0

80.0

100.0

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

Per Capita Stainless Consumption

25.0 Japan

Per Capita Stainless Use, in kg

20.0 Germany
15.0

10.0 China 5.0 India 0 10,000 20,000 30,000 40,000

USA

0.0

50,000

60,000

GDP in '000 US$ per Capita (ppp adjusted)

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

Economic Growth drives Stainless & FeCr

35.0
Global Stainless Steel Consumption in Mill t
30.0

Stainless Steel
2006 2007

2010

25.0
20.0

2011

2008 2009

15.0
10.0

5.0
0.0 1968

Corr: 0.99

0.0

20.0

40.0

60.0

80.0

100.0

10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 1968 0.0

Ferrochrome Consumption
2007 2006
2011 2010 2008 2009

Global Ferrochrome Consumption in Mill t

Corr: 0.98

0.0

20.0

40.0

60.0

80.0

100.0

GDP, in Trill US$ (PPP adjusted)

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

Global Charge / HC FeCr Market

Charge / HC FeCr Demand
45
30 25

Charge & HC FeCr Production

Russia

Growth Rate 2000 - 2010 in % p.a.

40

Growth Rate 2000 - 2010, in %

35 30 25 20 15 10 5 0 -5
0 20 40
Others India Other America Other Asia NAFTA China

20 15 10 5 0 -5 -10 -15

China

India

South Africa

Finland Sweden Zimbabwe Others

60

80

EU
Japan

Share of FeCr Demand in %

10

20

30

40

50

60

70

80

90

Share of Production, in %

Others incl. Albania, Romania & Iran

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

Brazil

Average Growth Rate: 6.0% p.a. Kazakhstan Turkey

China Stainless Super Power & FeCr Converter

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

Global Stainless Steel Consumption

40 35

2006
1: Other Europe 2: Africa 3:Australasia 4: Other America 5: Middel East
China

2010
40 35 1: Other Europe 2: Africa 3:Australasia 4: Other America 5: Middel East

Growth Rate 1997 - 2006 in %

25 20 15
10

Growth Rate 2001 - 2010 in %

30

30

25 20 15
10

China

5 4 3 2

India
Other Asia

5 0 -5 -10
0

1 Japan NAFTA

EU27

4 5 1 5 2 0 3

India Other Asia EU27 NAFTA

-5 -10
0.5 1 1.5

Japan

0.5

1.5

Relative Market Share

Relative Market Share

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

Chinese FeCr Demand

4.5 4.0 3.5 3.0 in Mill t 2.5 2.0 1.5 1.0 0.5 0.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Export Surplus Production G.R.: 26.9%
0.5% 0.3% 21.7% 49.9% 27.6%

FeCr Production & Demand

Main Supply Source

0.9%

Others
Apparent Consumption G.R.: 41.7%

Russia Zimbabwe India Kazakhstan

Import Surplus

2.4%

1.0%

14.3%

28.2%

South Africa

53.2%

2005

2010

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

FeCr Production based on imported Ore

China Chromite Imports
2.5
Charge / Hc FeCr Production, in Mill t
Ferrochrome Production G.R. 23.0%

10.0 9.0
Cr Ore Exports to China, in Mill t

4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0

S. Africa Cr Ore Exports to China

Total Ore Exports to China, G.R.: 56.1%

100 90 80 70 60 50 40 30
Ratio of UG2, in %

2.0

8.0 7.0

Cr Ore Imports, in 000 t

1.5
Total Ore Imports, G.R.: 21.2%

6.0 5.0

1.0

4.0 3.0

0.5

Imports from South Africa G.R.: 54.0%

2.0 1.0 0.0

UG2 Exports to China G.R.: 67.4%

20 10 0

0.0
2005 2006 2007 2008 2009 2010 2001 2002 2003 2004 2005 2006

2005

2006

2007

2008

2009

2010

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

China FeCr Demand Outlook

12.0 Actual
Demand G.R.: 41.7% Production G.R.: 26.9%

Forecast
Demand G.R.: 10.7% Production G.R.: 5.1%

35 30 25

Stainless Steel Melting Production in Mill t

FeCr Production & Demand, in Mill t

10.0 8.0 6.0 4.0 2.0 0.0

Import Surplus

20 15 10

Export Surplus

5 0

2001

2003

2005

2007

2009

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

2019

2011

2013

2015

2017

March 2011

South Africa Ore Supplier or FeCr Producer?

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

South Africas Chrome Ore Reserves

Chromite Ore Reserve Rank in Mill t in %
South Africa Zimbabw e Kazakhstan Finland Turkey I ndia Brazil Others 7,340 930 387 120 70 67 17 576 77 10 4 1.3 0.7 0.7 0.2 6.1 1 2 3 4 5 6 7 8

Chromite Ore Output in Mill t in %

14.8 *) 0.6 3.8 0.6 2.4 3.2 0.7 3.7 49.5 1.9 12.8 1.9 8.1 10.7 2.4 12.5

Total

9,507

100.0

29.9

100.0

*) incl. UG2 & Independent Mines Source: Departm ent of Mineral Resources, South Africa, Heinz H. Pariser

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

UG2 Mine Production & Tailings

12,000 80.0 70.0

10,000 Potentail Output of UG2 Tailings

Est. Utilisation of UG2 Tailings, in %

60.0 50.0
40.0

8,000
in 000 t

6,000

4,000 Actually Identified Tailings

30.0 20.0 10.0 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

2,000

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

South Africa Chrome Ore Usage

16,000

14,000

12,000

Total Chrome Ore Supply G.R.: 6.2%

in Mill t

10,000

Cr Ore Exports G.R.: 19.3%

8,000

Input Other Cr Ore G.R.: -3.0%

6,000
Input Metallurgical Cr Ore G.R.: 3.2%

4,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

South Africa Chrome Ore Market 2010

Output 14.9 Mill t Revenues: 1,697 Mill $

Export Revenues: 1,144 Mill $

Metallurgical Revenues: 360 Mill $ internal sales FeCr - Domestic & Export Sales Revenues: 3,816 Mill $

Chemical & Foundry Revenues: 193 Mill $

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

India The Next Boom Market?

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

Global Stainless Steel Consumption

40 35

2006
1: Other Europe 2: Africa 3:Australasia 4: Other America 5: Middel East
China

2010
40 35 1: Other Europe 2: Africa 3:Australasia 4: Other America 5: Middel East

Growth Rate 1997 - 2006 in %

25 20 15
10

Growth Rate 2001 - 2010 in %

30

30

25 20 15
10

China

5 4 3 2

India
Other Asia

5 0 -5 -10
0

1 Japan NAFTA

EU27

4 5 1 5 2 0 3

India Other Asia EU27 NAFTA

-5 -10
0.5 1 1.5

Japan

0.5

1.5

Relative Market Share

Relative Market Share

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

Indias FeCr Demand

1.2 1.0 0.8

FeCr Production & Demand

Production G.R.: 13.3%

Main Export Destinations

Others Nethrlands United States South Korea Japan China
3.2% 2.5% 24.6% 1.8%

in Mill t

0.6 0.4 0.2 0.0

Export Surplus 14.9% 5.2% 32.5% Apparent Consumption G.R.: 5.6% 23.5% 23.9%

19.0%

48.9%

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2005

2010

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

India Stainless Production & FeCr Demand Outlook

1,200

Actual G.R.: 8.6% G.R.: 5.3% G.R.: 9.4% G.R.: 8.8%

Forecast

6,000

Charge / HC FeCr Consumption, in 000 t

1,000

5,000
Stainless Steel Melting, in 000 t

800

4,000

600

3,000

400

2,000

200

1,000

0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

Conclusion

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

Conclusion
- Global stainless production has come back to historic growth patterns of some 6% per annum - Demand for ferrochrome will continue to rise with China increasing its already dominant position - India has and will experience extraordinary growth in stainless and a rising ferrochrome demand but on a different scale than China - South Africa is a chrome ore supplier and ferrochrome producer but where will it position itself in the future?

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

Contact Details Dr. Gerhard C. Pariser

Heinz H. Pariser Alloy Metals & Steel Market Research Scharnstr. 51 46509 Xanten Germany Tel.: +49 2801 77 11 0 Email: [email protected]

You are always welcome to contact us.

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011

Panel Discussion Dr. Danko Koncar, Ruukki Metals

Jrgen Schalamon, Samancor Cr

Robert Yildirim, Yildirim Group / EtiKrom

Mark Midgley, ENRC

Dr. Gerhard Pariser, Heinz H. Pariser Alloy Metals & Steel
Market Research

Source: Heinz H. Pariser Alloy Metals & Steel Market Research

March 2011