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Chrome-Ore Demand Pressures Zimbabwe to Relax Export Embargo

March 12 (Bloomberg) -- Zimbabwe is facing “huge” external demand for chrome ore, renewing pressure on the government to relax a law that bans exports of the unprocessed material, Mines Minister Walter Chidakwa said.

There has been a “lot of pressure on us to lift the ban,” Chidakwa said by phone yesterday from the capital, Harare. “Everybody is looking for raw chrome on the market, the pressure on us is huge.”

Zimbabwe started an embargo on exports of chrome ore in April 2011 to try force companies to process the metal locally. The ban resulted in some producers, such as Harare-based Zimbabwe Alloys Chrome Ltd., shutting down mining operations because of the country’s inadequate smelting capacity. Ferrochrome, produced in smelters using chrome ore, is used to make stainless steel.

The nation has the world’s biggest platinum and chrome deposits after South Africa and has reserves of diamonds, gold, coal, nickel and iron ore. Companies that operate in the country include Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Aquarius Platinum Ltd. Mining is the country’s biggest source of foreign exchange, with platinum group metals and gold leading tobacco as the nation’s biggest exports.

Situation Dire

Sinosteel Corp.’s Zimasco ferrochrome unit in Zimbabwe in late 2012 said it would cut production by 40 percent. Last month, the company said it would cut 1,500 jobs to reduce costs, the Harare-based Source reported, citing a company document.

“The situation in the chrome-mining industry is dire, it has reached critical levels,” Chidakwa said. “It’s not going to be easy for us to relax the ban. To open the window for ore exports when we have said we want beneficiation, we will be sending a message that there is no need for value addition. It might discourage investors.”

Zimbabwe will continue to seek investors to build chrome-smelting capacity and there are negotiations with some to establish smelting plants “even without necessarily engaging in mining activities,” Chidakwa said.

Afrochine Smelting Ltd., a Chinese company, has started constructing a chrome smelter with annual capacity of 40,000 metric tons, Chidakwa said.

“We hope that other investors will see the same potential and invest in chrome smelting in Zimbabwe,” Chidakwa said.

To contact the reporter on this story: Felix Njini in Windhoek at fnjini@bloomberg.net

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net Ana Monteiro, Alastair Reed

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