Exporters of raw material slam proposal that would assist local ferrochrome producers as ‘a costly mistake’
Local government is still investigating the cause of the incident, the authority said, without saying whether production and operation at the project have been halted.The government is mulling a 25% tax on exports of raw chrome to protect the local ferrochrome industry, which is battling high electricity prices and shedding thousands of jobs.
a framework to revive growth and create jobs in South Africais proposing the 25% tax on exports of chrome ore to keep domestic prices lower than international ones. It further calls for Eskom to offer preferential energy rates to ferrochrome producers, but without penalising those who want to build their own generation capacity. Chrome ore exporting miners have slammed the proposed tax as a “costly mistake”. However, a ferrochrome producer said they would support a 25% tax on raw chrome ore, saying the levy would generate enough fiscal space to offer the electricity tariff relief sought by the ferrochrome industry. The ambitious growth plan seeks to turbocharge the implementation of reforms through what it calls a “big bang” approach to ramp up economic growth to 3.5% and drive gross fixed capital formation towards the 20% to 25% mark by 2030.South Africa holds more than 70% of the world’s chromite reserves, making it the logical and strategic home for ferrochrome — a critical alloy in global stainless-steel production. But high electricity prices have seen large ferrochrome producers shutting off smelters, putting up to 250,000 jobs at risk. Producers say they cannot afford to keep energy-intensive smelters firing due to Eskom’s high tariff and are unable to compete with Chinese smelters that produce at lower tariffs. Around 14 smelter closures in recent years have led to 350,000 job losses across the ferrochrome value chain. Glencore has announced retrenchments at its ferrochrome smelter jointly operated with Merafe Resources. It said the process would affect the Boshoek and Wonderkop smelters in Rustenburg, while the Lion smelter is currently being evaluated and may potentially see a reduction to half its operating capacity. The chrome mining sector has also consistently increased employment, while data from Sars indicates record export volumes of 20.5Mt in 2024, earning the country R84.6bn in export revenue. For this reason, export taxes have not been implemented to date, and there remains no reason why export taxes would support increased beneficiation in South Africa now.Earlier this month, the cabinet announced it had approved a tariff on exports of chrome ore to help the struggling domestic industry, but did not disclose the quantum. It also agreed to export controls, with exporters required to obtain permits from the International Trade Administration Commission . However, chrome exporters have warned that export restrictions will fail to protect the ferrochrome industry while costing thousands of jobs in the mines. Chrome SA, whose members include Sibanye-Stillwater, Valterra Platinum and Tharisa, said policymakers were right to be worried about the closure of smelters, but the export tariff would do more harm than good. They said introducing export restrictions, quotas or taxes would not make electricity cheaper or more reliable. “Instead, these measures would cut into already thin margins for chrome ore miners, most of whom rely heavily on exports for survival. Independent miners would be the hardest hit.” Chrome ore mining, the group said, continued to attract investment and create jobs. Last year alone, chrome ore exports generated R84bn in foreign exchange earnings, benefiting the fiscus. “Sacrificing this progress for a policy that does not solve ferrochrome’s underlying problems would be a costly mistake.” Chrome SA said an export tax would have a knock-on impact on investor confidence. “Adding another layer of uncertainty through punitive export restrictions risks deterring new investment. Investors seek stability and predictability.” In July, the Minerals Council South Africa also voiced its opposition to the mooted export tax. “A particular concern in the cabinet statement is the approval of the concept of an export tax on chrome concentrate,” it said. “Such a proposal has been raised a number of times over the years, each of which was followed by extensive engagements with the Minerals Council’s chrome members.” The council said that, according to Stats SA, in real inflation-adjusted terms chrome production increased by an average of 8.4% between 1994 and 2024. It said this vastly outpaced an increase of 1.3% in total non-gold production over the same period. “The chrome mining sector has also consistently increased employment, while data from Sars indicates record export volumes of 20.5Mt in 2024, earning the country R84.6bn in export revenue. For this reason, export taxes have not been implemented to date, and there remains no reason why export taxes would support increased beneficiation in South Africa now,” the council said., the MD of Menar — which has acquired the Khwelamet Metalloys manganese smelter complex in Meyerton from Samancor — urged the government to push ahead with the proposed tax on raw chrome ore. “An export tax on unbeneficiated ore will generate fiscal space for electricity relief, tilt market forces toward domestic beneficiation, and strengthen SA’s strategic sovereignty,” he said. Bayoglu calculated that a 25% levy on every 25Mt of chrome ore bound for export would generate up to R34bn for the fiscus based on a $300 per tonne price. “Even a fraction of this revenue would more than cover electricity relief for smelters, without Treasury subsidies or putting the burden of electricity reductions on the public,” he said. “South Africa has already lost most of its steelmaking and manganese smelting capacity. We cannot lose ferrochrome next. As a Brics member and friend to China, South Africa should actively encourage Chinese investment into downstream chrome beneficiation, bringing jobs and value closer to the resource.” Nellis Bester, chair of the Ferro Alloy Producers Association , an industry body representing ferroalloy smelting companies, said they were unsure if such a tax would help or harm the economy. “The chrome export tax is a very difficult subject,” he said. “On the one hand, it can help; on the other, it can penalise the mining industry exporting this commodity.” Bester said Fapa has proposed that the government tackle illegal chrome mining and the exportation of illegal chrome ore as the starting point for the industry to survive. “Up to 10% of all chrome exports are coming from illegal mining. So Fapa’s opinion is that the first point of attention is how we ensure ore is legitimately mined, which is a lot of revenue for the government.” But the biggest headache they faced was an uncompetitive electricity tariff from Eskom, he said. “We are bleeding, and we are totally uncompetitive because of that. You can immediately help the smelters by giving them a competitive tariff, which will then assist in consuming more local ore, employing more people, protecting jobs and ensuring more revenue towards Eskom, which is crucial. And then, if it is not enough, you can look for taxes on ore exportation.” Bester said the industry was eagerly awaiting an official announcement on whether the government would assist the smelters in negotiating favourable power tariffs for furnaces. “The only way you are going to save the smelters and their base of employment is with a competitive electricity tariff; there is nothing else you can do. We have been saying this for the last 15 years: we are going to hit the wall. “And for more than 15 years, we have implemented all cost-saving options we have available; we have invested in the best technologies to ensure we are not wasting power; we have stopped production in winter to try to reduce the cost and assist Eskom; there is nothing more we can do, we are clean to the bone today.” Out of 80 furnaces in South Africa, only eight are operating, Bester said. “Imagine the loss of revenue to Eskom with 72 furnaces not consuming power from . Eskom today has excess power due to the electricity availability factor, which has improved from less than 50% to over 70%, but nobody is consuming.” Electricity minister Kgosientsho Ramokgopa recently met with the leadership of Glencore, Samancor and Eskom to try to resolve the tariff impasse, but no agreement was reached.
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