This document presents an overview of the chrome industry in India and China, highlighting trade evolution, market dynamics, and future scenarios. It discusses India's significant chrome reserves, production capabilities, and the fragmented production base in China, while detailing trade statistics and dependencies between the two countries. The forecast suggests that both nations will continue to collaborate in the chrome and ferro chrome market, with India's supply being critical to China's needs.

1. Chrome Business India – China Yesterday, Today & Tomorrow Presented at “Chromium 2009” Conference of the International Chromium Development Institute

2. This presentation is an amalgamation of authors’ own views and thoughts. Tata Steel or IFAPA do not necessarily subscribe to the views and thoughts expressed in the presentation and should not be held responsible for the same.

3. Presentation outline Chrome Industry in India & China India China Chrome Trade – the evolution Historical trade flow and Key Observations Analysis of market dynamics Future scenario and Conclusion

4. Chrome Industry – India & China

5. The Indian Chrome Industry Total reserves (incl Resources) of Chrome Ore - 213 Million MT Proved -31 Million MT, Probable -35 Million MT, Recoverable- 66 Million MT 98% occurrence is in the state of Orissa. Chrome Ore is Stratiform in nature and mining is opencast. Output mainly Metallurgical ; Chemical and Refractory grades are also produced. 3rd biggest producer of Chrome ore in the world. Two main producers -Tata Steel & Orissa Mining Corporation. Chrome Ore export is canalised with system of quantity allocation and periodic floor price fixation by Govt. Current export duty – Rs 3000/MT (USD 65 at Rs 46-1 USD exchange rate).

6. Chromite mines in India

7. The Indian Chrome Industry contd. Total Manufacturing capacity of Ferro chrome 876 MVA. 70% capacity is in the state of Orissa . Highly fragmented production base with existence of high level of idle capacity and swing production. Only a few producers are integrated with captive production of mines. High power cost adversely affect cost of production. Imported Chinese coke is preferred reductant.

8. NBFA, Dhenkanal FACOR, Garividi TBAPL,Raigarh Production Unit FACOR, Randia FAP, Bamnipal FeCr Production in India Rawmet Jindal Stainless Sri Vasavi Steel Rohit Ferro Tech Balasore Alloys IMFA Visa Steel, KalingaNagar

9. India –Stainless steel highlights Total production capacity 2 million MT. Product mix- 75% Flat and balance Long. More than 70% output in 200 series Majority from Private enterprises which mainly produce Flat products. 5% production from Govt enterprises who are mostly in Long products In 2009 SS production expected 1.7 mill MT. Export 0.5 million MT.

10. Ambika Steel Rathi Steel & Power Rimjhim Steel Jindal Stainless Shah Alloys Chandan Steel Viraj Alloys Mukand Ltd Panchmahal Steel Stainless Steel Production in India

11. China – Chrome Industry Chrome ore : Small reserve; deposits both in Podiform and Stratiform. Output Metallurgical and Refractory. Significant usage in Chemical and Refractory application. 2008 production 300,000 MT. Output insufficient to meet huge domestic demand.

12. China – Chrome Industry contd Ferro chrome : Extremely fragmented production base with existence of idle capacity. Industry plagued with inefficient energy consumption, high power cost and over-reliance on imported ore. Net importer of High Carbon Ferro Chrome from 2002 . Import volume went for quantum jump in last two years. Significant production of Silico Chrome and Low Carbon Ferro Chrome.

13. Production bases of Chrome Ore and High Carbon Ferro Chrome in China Chrome Ore Chrome Ore Ferro Chrome

14. China –Stainless steel Industry highlights Total production capacity 13 million MT; one-third of global capacity 7 million MT from State Owned Joint enterprises which mainly produce Flat products 6 million MT from private enterprises mostly in Long products In 2009 SS production expected 8 mill MT with capacity utilisation of 62%. 2009H1- Production -4.06 million MT Import - 0.59 million MT 11% low YOY Export -0.25 million MT 54% low YOY

15. Tsingshan (Qingshan) Iron & Steel Co. Baosteel Youyi Special Steel Rouyi Steel Huaye steel Hangzhou Iron & Steel Qingyuan Tsingshan (Qingshan)SS LISCO Huaye Tsingshan (Qingshan) Jinhui SS Henan Wanhe Dongbei Gp – a) Dalian Iron & Steel b) Fushun Special Steel c) Beiman Special Steel Wuhang SS TISCO Shanxi Yida ZPSS Nantong Huaye Steel JISCO Taishan SouthEast Special Steel Juxing Jiangpu SS Mills

16. India China Chrome Trade – The Evolution

17. Chrome Equation in China

18. Chrome Unit Balance - China & India Trade 2000 2004 2008 ‘ 000 MTPA ‘ 000 MTPA Domestic Import Domestic Import Domestic Import ‘ 000 MTPA Cr Ore FeCr Cr Ore FeCr Cr Ore FeCr 570 2360 6940 SS Prodn 114 448 1249 Cr Units Net Exporter 171 582 156 277 667 0 22 55 India’s Contribution Cr Units 242 254 188 Cr Unit from FeCr

19. Historical trade flow and Key Observations

20. China’s dependence on India in Chrome Ore or Chrome Alloys China started FeCr import from India in 2004: 37,325 MT

21. EXPORTING COUNTRIES SA : 1st Oman: 3rd Turkey: 2nd India : 4th CHROME ORE: Import Trade Flow of China Import: 6.44 m MT in 2008

22. SA : 1st Kazak: 2nd India : 3rd High Carbon Ferro Chrome/Charge Chrome: Import Trade Flow of China EXPORTING COUNTRIES Import: 1 m MT in 2008

23. China : 1st Japan: 2nd Cr Conc Export: 0.63 m MT in 2008 Export Trade Flow of India: Chrome Concentrate

24. Europe: 4th FeCr Export: 0.45 m MT in 2008 China 3 rd Korea : 1 st Japan: 2 nd Export Trade Flow of India: Ferro Chrome

25. China’s Import of Chrome Ore & Concentrate

26. India's Cr Ore/Concentrate Trade Balance

27. China’s Import of High Carbon Ferro /Charge Chrome

28. India's FeCr Trade Balance

29. Key Observations India’s spend share as supplier of Chrome Ore & Conc to China- 2005 : 32%, 2007 : 16%, 2009(till Sept): 7% Absolute volume of India’s Chrome Ore & Conc export to China went for a gradual decrease over last four years. However China remained the main export destination. Share of India’s Chrome Conc total export as part of India’s total production falling gradually India’s spend share as supplier of Ferro Chrome to China- 2005 : 28% , 2007 : 14%, 2009(till Sept): 17% Barring 2008, absolute volume of India’s Ferro Chrome export to China went for a gradual increase over last four years. Share of India’s Ferro Chrome export to China as part of India’s total production increased to a level of 60%. India’s import of Ferro Chrome from China which comprises mainly Low Carbon Ferro Chrome is marginal but having an increasing trend.

30. Analysis of market dynamics

31. GDP growth & Domestic demand Per capita SS consumption SS product mix Usage of scrap Labour Cost Power Cost Factors affecting Sino-India Chrome Industry

32. Factors affecting Sino-India Chrome Trade Indian Export of Chrome Ore & Concentrate- Govt quota allocation and Floor price Correlation between Chrome Ore and Ferro Chrome import volume and price in China. Indian and Chinese producers’ relative competitive strength of Cost of production of Ferro Chrome. Nature of market and buying behaviour

33. Comparison of China's imported cargo price Chrome Ore Ferro Chrome

34. China’s preference for Indian Chrome Ore & Conc Quality – - As stand alone or as a good blending grade for High Carbon Ferro Chrome -Ultra high Cr2O3 and Cr:Fe cargo for Low Carbon Ferro chrome - Ultra high Cr2O3 with Ultra Low Silica for Refractory end-use - Low Alumina & SiO2 for Chrome Chemical Short sailing time No seasonal effect. Time Zone advantage

35. The Situation – An Analytical Look Only certain volume of Chrome Ore & Concentrate can be imported in China at economical cost to sustain competitive smelting. Simple economics prevails in China’s showing preference for Ferro Chrome between imported and domestic cargo. Indian Chrome Ore shifts to domestic value adding route.

36. Future scenario and Conclusion

37. Forecast of SS production in China Govt stimulus package started in end 2008 is in full force.

38. Projected SS demand in India Figs in ‘000 MT Source ISSDA Year Flat Long Total 2005 1001 153 1154 2010 1685 373 2058 2015 3185 900 4085

39. Growth of Ferro Chrome capacity of India and China

40. Future issues to ponder Scenario change in Chrome supply to China for origins other than India. Future offer of Indian Chrome Ore – Cost (Opencast to underground) and Product mix (High to Medium Grade) Future competitiveness of Indian Ferro Chrome ( Relative advantage of Power Cost) Backward integration by China SS mills and Ferro Chrome producers. Forward integration by Indian Ferro Chrome producers

41. Scenario Shift in Chrome Alloys : India - China

42. Conclusions China will remain the preferred export destination for Indian producers of Chrome Ore & Ferro Chrome . Survival matrix for Chinese endusers as well as value adding option of Indian producers will decide the fate of Indian Chrome Ore to be used for High Carbon Ferro Chrome production in China. In other segments (Chemical, Low Carbon Ferro Chrome) Indian chrome ore / concentrate will be a preferred choice in China.

43. Conclusions contd.. Rapid increase in Ferro chrome demand in China and India will boost Ferro Chrome production in India in a big way. Indian Ferro Chrome producers (mainly integrated ) going for Stainless Steel production will see India -China maturing from a supplier- customer relationship to twin movers of Stainless Steel in Asia.

44. Yin & Yang China & India Chrome Equation

45. The End

46. Thank You

47. Authors: Mr T S Sundaresan Secretary General IFAPA Mr Prabhash Gokarn Head (Marketing & Business Development) Ferro Alloys & Minerals Division, Tata Steel Mr Rajarshi Palit Deputy General Manager, Tata Steel Asia (Hong Kong) Ltd Acknowledgments Chrome Market Spotlight CRU Monitor Ryan’s Notes Metal Bulletin Research Tex Report ICDA Roskill Marketing Research Group of Tata Steel