SMEDA Chromite Beneficiation Plant

Pre-Feasibility Study

CHROMITE BENEFICIATION PLANT

Small and Medium Enterprise Development Authority Government of Pakistan www.smeda.org.pk HEAD OFFICE Waheed Trade Complex, 1 Floor , 36-Commercial Zone, Phase III, Sector XX, Khayaban-e-Iqbal, DHA Lahore Tel: (042) 111-111-456, Fax: (042) 5896619, 5899756 [email protected] st

REGIONAL OFFICE PUNJAB

6th floor, LDA Plaza, Egerton road Lahore. Tel: (042) 111-111-456 Fax: (042) 5896619, 5899756 [email protected]

REGIONAL OFFICE SINDH

REGIONAL OFFICE NWFP

REGIONAL OFFICE BALOCHISTAN

5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) 111-111-456 Fax: (021) 5610572 [email protected]

Ground Floor State Life Building The Mall, Peshawar. Tel: (091) 9213046-47 Fax: (091) 286908 [email protected]

Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. Tel: (081) 831623, 831702 Fax: (081) 831922 [email protected]

May, 2007

Pre-feasibility Study

Chromite Beneficiation Plant

DISCLAIMER The purpose and scope of this information memorandum is to introduce the subject matter and provide a general idea and information on the said area. All the material included in this document is based on data/information gathered from various sources and is based on certain assumptions. Although, due care and diligence has been taken to compile this document, the contained information may vary due to any change in any of the concerned factors, and the actual results may differ substantially from the presented information. SMEDA does not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. Therefore, the content of this memorandum should not be relied upon for making any decision, investment or otherwise. The prospective user of this memorandum is encouraged to carry out his/her own due diligence and gather any information he/she considers necessary for making an informed decision. The content of the information memorandum does not bind SMEDA in any legal or other form.

DOCUMENT CONTROL Document No.

PREF-02

Prepared by

SMEDA-Balochistan

Approved by

Head of Department

Issue Date

March, 2007

Issued by

Library Officer

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Chromite Beneficiation Plant

INTRODUCTION TO SMEDA

The Small and Medium Enterprise Development Authority (SMEDA) was established with the objective to provide fresh impetus to the economy through the launch of an aggressive SME support program.i1 Since its inception in October 1998, SMEDA had adopted a sectoral SME development approach. A few priority sectors were selected on the criterion of SME presence. In depth research was conducted and comprehensive development plans were formulated after identification of impediments and retardants. The all-encompassing sectoral development strategy involved recommending changes in the regulatory environment by taking into consideration other important aspects including financial aspects, niche marketing, technology upgradation and human resource development. SMEDA has so far successfully formulated strategies for sectors including, fruits and vegetables, marble and granite, gems and jewelry, marine fisheries, leather and footwear, textiles, surgical instruments, urban transport and dairy. Whereas the task of SME development at a broader scale still requires more coverage and enhanced reach in terms of SMEDA’s areas of operation. Along with the sectoral focus a broad spectrum of business development services is also offered to the SMEs by SMEDA. These services include identification of viable business opportunities for potential SME investors. In order to facilitate these investors, SMEDA provides business guidance through its help desk services as well as development of project specific documents. These documents consist of information required to make well-researched investment decisions. Pre-feasibility studies and business plan development are some of the services provided to enhance the capacity of individual SMEs to exploit viable business opportunities in a better way. This document is in the continuation of this effort to enable potential investors to make wellinformed investment decisions.

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For more information on services offered by SMEDA, please visit our website: www.smeda.org.pk

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PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs in project identification for investment. The project pre-feasibility may form the basis of an important investment decision and in order to serve this objective, the document/study covers various aspects of project concept development, start-up, and production, finance and business management.

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WHAT IS CHROMITE

The mineral Chromite is an oxide of chromium, iron and magnesium, and, is the only ore of chromium. It is black or brownish black in color and has a metallic luster. The specific gravity ranges from 4.3 to 4.6. Although pure Chromite Ore has the form FeOCr2O3 in nature, magnesium substitutes for chromium. Naturally occurring Chromite mineral is a spinal - group mineral described by the formula (Fe, Mg), (Cr, Al, Fe)2O3. Chromite ore rarely contains more than 50% Cr2O3 and other minerals such as Silica (SiO2) are also present. Chromium is not found as the free metal in nature. The most important ore is Chromite (FeCr2O4). Chromite is used in the manufacturing of Ferro-chrome alloy, Refractory bricks and in the manufacturing of chromium based chemicals.

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PROJECT PROFILE 4. 1

Project Brief

This project is related to setting up a Chromite Beneficiation Plant to enrich the Chromite content of the ores, liberate them from unwanted rock material and other minerals and eventually separate the final product into uniform grain sizes. In other words, the purpose of beneficiation is to render the ore physically and chemically suitable for further treatment. 4. 2

Opportunity Rationale

Pakistan is importing its entire requirements of ferroalloys, basic refractory bricks as well as chromite chemicals. Although the chromite reserves may not be very large but are substantial enough to support value added projects to meet the domestic requirements. Generally high and medium grade ore is exploited and the low grade is left behind – sheer wastage of resource. This offers a reasonable opportunity for the exploitation/up gradation of low-grade ore and will go a long way towards the production of value added products – i.e. concentrates. These concentrates can either be exported at higher price or can be used to produce value added products –basic refractory bricks, ferroalloys or chromite chemicals. Past experimentation has established beyond any doubt that the low-grade ore can be up graded economically. Moreover the refractory plants can suitably use high-grade metallurgical ore provided the silica contents be reduced to specified limits by the process of beneficiation – less than 5%. Although small size chromite beneficiation plants are installed at Karachi by the exporters to upgrade the low-grade ores, which is subsequently blended with the ore meant for export purposes but establishment of such small sized plants within the mining areas will not 3 BAL-PREF-02/March, 2004

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only eliminate the cost of transportation of wastages but will also create industrial activity in these remote areas with an added advantage of ensured availability of raw material. High-grade concentrates can be produced by beneficiating low-grade ores. Again the silica content of high-grade ore can be reduced to less than 4% by the process of beneficiation, making these ores suitable for utilization by refractory industry. 4. 3

Proposed Business Legal Status

It is recommended that this project should be started as sole proprietorship or partnership as this does not involve heavy investment. Moreover, less complications and costs are involved in forming, administering and running the sole proprietorship or partnership business. The tax rates applicable for sole proprietorship are lower than private or public limited. 4. 4

Project Capacity and Rationale

The plant would produce 15,000 tonnes of concentrates per annum. The required machinery details are given under its appropriate head. 4. 5

Project Investment

The total cost of the project is Rs. 12.5 millions. This amount includes the land, machinery, building, furniture and fixture, and raw material inventory etc. However, the cost of land varies from area to area. 4. 6

Suitable Location

The area of Muslim-Bagh & Khanozai can be the most suitable location for the installation of such a plant because of its nearness to the mining area and availability of water and power. Similarly Dalbandin, Kharan & Wad could also be suitable locations for beneficiation of ore found in these localities. 4. 7

Key Success Factors / Practical Tips for Success

Traditionally Pakistan has been exporting Chromite to the metallurgical industry alone. The production of concentrates with low SiO2 content – suitable for utilization by the refractory industry – will not only open a new export market but will also eliminate the hazard of cyclic low consumption by the metallurgical industry as well as helping the mining industry for a continuous outlet of the material albeit at higher prices. Other factors affecting the success of this business proposition will be: 

Mining of low grade ores to produce concentrates



Abundance of cheap labor and raw material



A close liaison with the consumers, and

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Location of the beneficiation plants close to the mining areas.

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CURRENT INDUSTRY STRUCTURE 5. 1

Chromite Producing Areas

Chromite was first discovered in 1901 in the areas between Khanozai & Muslimbagh (Hindubagh) in Zhob valley, Balochistan, and mining started in 1903. It has passed through various phases of development since then. Balochistan is contributing great share towards the production of chromite ore in the country. This can be confirmed by the fact that in 1996 Balochistan produced 23,000 tons of chromite out of the total production of 24,484 tonns for Pakistan2. The systems are laid such that the actual production from the mines is not reported correctly. Thus during 1992-93, export of 45,955 tonnes of chromite was mined against reported production of 24,484 tonns. According to local mine owners & traders Chromite production from Balochistan in year 2005-2006 has exceeded 200,000 tons. The production of chromite is dependent on the international demand. High and low cycles in the exported quantities reflects the fluctuation in demand and FOB prices. Similar discrepancies can be observed in the subsequent years as well. During 1982, M/S Nippi Boeki Kabushiki Kaisha of Japan worked out a requirement of 50,000 tonnes of ferroalloy per annum at an estimated production level of 1.7 million tonnes of steel per annum and recommended the establishment of such a plant. 5. 2

PAKISTAN’S CHROMITE TRADE SCENARIO

In the absence of value added projects in the region, bulk of the ore mined is being exported. The export earnings from Chromite ore & concentrates during the period 2001-2005 have varied from US$ 7.002 million to UD$ 32.825 million respectively, i.e. a total 5 years exports estimates to US$ 83.837 million.3

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Department of Geological Survey of Pakistan, Quetta

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Trade Analysis System, (ITC/UNSD) COMTRADE DATABASE SYSTEM

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Table 5.2.1

Chromite Beneficiation Plant

Production, Exports and Value of Exports of Pakistan’s Chromite

The Export Earnings of Chromite ore & concentrates from Pakistan in the year 2001-2005 are as under:

Export Earnings of Chromite from Pakistan

Export Earnings (US$-millions)

35

32.825

30 25.546 25 20 15 10

12.902

7.002

5.562

5 0 2001

2002

2003

2004

2005

Year Source: Trade Analysis System (ITC/UNSD) COMTRADE DATABASE SYSTEM

Pakistan is importing its entire requirements of ferroalloys, basic refractory bricks as well as chromite chemicals. Although the chromite reserves may not be very large but are substantial enough to support value added projects to meet the domestic requirements. 5. 3

Advantages of the Beneficiation Plant at the Mining Site

Currently the ore is transported and upgraded in the mini beneficiation plants established in Karachi. This means the impurities in the ore are also transported to Karachi, thus increasing the transportation costs. Having a plant in Balochistan, near to the mines, would mean that the impurities get treated at the source and only the end product is transported. This will give savings to the plant/mine owner in the form of low transportation costs. The plant will upgrade the low grade Chromite and thus will provide a uniform standard of high grade material. With the value addition activity being carried out in Balochistan, the stakeholders in the value chain will be getting higher returns for their input. This will improve the cash inflow in this sector, thus increasing the importance of the sector. Once this is achieved, the stakeholders will start improving the current uneconomical practices being carried out in the industry ensuring continued supply of Chromite to local & international markets.

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MARKET INFORMATION 6. 1

Industrial uses of Chromite

The utilization of chromite ores in three main industrial groups in terms of percentages is provided below: 

Metallurgical –About 65 % to 70 % of the entire production is used by this sector alone.



Chemical – this sector utilizes about 15 % to 20 % of the ore produced.



Refractory – about 10 % to 15 % of ore is consumed by this sector.

6.1.1 Metallurgical Chromium is used in metallurgical industry to produce stainless steel and other special steels. Addition of small or moderate amount of chromium, with or without other alloying agents improves the hardness, tenacity, ductility, and the corrosion and oxidation resistance of this metal. Ferrochrome containing about 70 % - 75 % chromium is added to produce ferro alloys. The ferrochrome industry utilizes chromite ore containing at least 40 % Cr2O3 and normally having a Cr:Fe ratio of about 3:1. The ore should be hard, lumpy with minimum quantity of fines. However, with the development of a new process (agglomeration of the ores and the AODargon-oxygen decarburisation process for the production of stainless steel), an increasing amount of friable ores and fines as well as ores having very low Cr:Fe ratio – down to 1.6:1 – can now be used for metallurgical purposes. Chromium is a constituent of a variety of alloy steels, cast iron, and, non-ferrous alloys, chromium’s function in these products is to enhance their mechanical properties or to impart special properties of electrical or abrasive resistance. 6.1.2 Chemical Chromium pigments represent the largest use of chromium in the chemical industry. Sodium dichromate – the primary base material for manufacture of chromium chemicals – is used to manufacture chrome green, chrome oxide green, chrome yellow, molybdenum orange and zinc chromate pigments. These pigments are used in paints, ink and roofing granules, the familiar chromium plating used in automobile trim, appliances and other consumer goods is derived from chemicals. Other uses that take advantage of special properties of these chemicals are in leather tanning, metal treatment – corrosion, inhibitor – drilling mud’s, textile, dyes, catalysts and wood and water treatment. Chromite ores for chemical uses (in the form of concentrates and fines) should contain at least 45 % Cr2O3, not more than 25 % FeO and 8 % SiO2, and a low MgO and S-content. 6.1.3 Refractory Due to its high melting point, its (nearly) chemical neutrality, and its resistance against acids and bases at high temperatures, chromite is used in the production of refractories, particularly production of refractory bricks. The major application of chromite refractories is in iron and steel processing, non-ferrous alloy refining, glass making and cement processing. 7 BAL-PREF-02/March, 2004

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Chromite ores containing 30 % - 46 % Cr2O3 (and a preferable combine content of Cr2O3 and Al2O3 in the range of 57 % to 63 %), with 15 – 20 % MgO, a low silica content of up to 5 % SiO2, and a low iron oxide content of about 15 % are used. A new field for chromite consumption is in the (steel) foundry industry as a molding medium, especially where a large scale and close tolerance have to be met. The grain size should be between 0.1 mm to 0.2 mm. Common specifications for such chromite sands are as follows: Cr2O3 Fe2O3 SiO2 CaO MgO

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44 % to 47 % 18 % to 26 % about 1.5 % 0.1 % to 0.5 % 10 %

PRODUCTION PROCESS

The methods and the machinery used in the process of beneficiation of chrome ore for highgrade basic refractory raw material are the following. 7. 1

Crushing

Crushing of lumpy Chrome ore requires Jaw Crushers, Drum Roller Crushers and Hammer Crushers. 7.1.1 Jaw Crusher The size and specifications are as Jaws width = 14”, length = 18” and the displacement must be less than half inch. Motor required for power is about fifteen kilowatts, with a speed of 950 rpm. 7.1.2 Drum Roller Crusher The diameter of drum must be of 24” and the length of the drum should be of 18”. Two motors of ten kilowatts are required with a gear transmission and the speed of about 35-rpm. 7.1.3 Hammer Crusher: The hammer crusher of a normal size is required with a minimum speed, so that a maximum quantity of coarse size could be achieved. The power that is required for a normal size hammer crusher is 25 kilowatts with a speed of 950 rpm. 7. 2

Sizing

Vibrating screens are required for sizing both on the initial stage and for the final material. The size of screens could be from 8’ to 10’ in length and about two and a half feet in width. The power required for vibrating screens is 3 to 5 kilowatts. The sheets of ready-made screens of the required size could be attached with this machine. The minimum size of about 80 meshes could be separated in this type of vibrating screen.

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7. 3

Chromite Beneficiation Plant

Conveyor Belt

Conveyor belts are required on the feeding and discharge of each machine. Motors required for the conveyor belts should be about 2 kilowatts with a gear transmission of the speed of about 60rpm. 7. 4

Shaking Tables

If a mixture containing mineral particles of different specific gravitates is agitated in water and then allowed to settle, the heavy particles will sink more rapidly to the bottom layer. Taking advantage of this phenomenon in its simplest form, the dirt can be washed away to leave the gold sediment in the pan. When a water/solid mixture flows over the surface of the Table the dense particles sink in advance as of the lighter particles. The jigging action of the Table causes the heavy concentrates to progress towards the end of the table, whilst the lighter particles or ‘tailings’ are washed over the lower edge. The table part of the machine, often referred to as the deck, is normally manufactured from best quality timbers with a 15-mm marine ply surface, and steel reinforcing where necessary for extra strength. The surface of the Timber deck has a covering of the material, which acts both as a wearing surface and a waterproof barrier to protect the timber beneath. The capacity of full size Concentrating table varies according to the duty. On coarse feeds, up to one ton (1000 KGs.) per hour of solid can be obtained and even double of the mentioned quantity when the table is used for roughing work. On more difficult ores, and especially with slims the capacity may be as low as 5 cwt. (250 KGs. Per hour). 7. 5

Roller Dryer

The ore concentrates from the table are wet and it needs to be dried before the end use. For the drying purpose a rotary dryer is used. Rotary dryer is a cylinder, made up of MS. sheet of at least half inch thick. The length of dryer should be 20 feet and its diameter will be about two and a half feet. The main body of the dryer is based on four small wheels or rollers, tapering towards the discharge end. Material is fed from the upper side. The dryer could be rotated with the help of a gear or chain and sprocket, driven by a motor. Dryer could be gas fired or fired with furnace oil. The burners are placed at the discharge end with an air blower, firing upwards to the feeding end. The capacity of the dryer should be two tons per hour 7. 6

Raw Material Requirement

The basic raw material required is the chromite ore. Balochistan contributes high share in the overall production of Chromite in the country. The chromite reserves are located in the areas of Muslim Bagh, Khanozai, Dalbandin, Kharan and Wad.

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MACHINERY REQUIREMENT

The main equipments required for running the chromite beneficiation plant are listed in the table 8-1 below: Table 8-1

Machinery Requirement Details

Description Jaw Crusher (Length 18”, Width 14”, Displacement