South Africa’s chrome mining sector has fiercely rejected government plans to impose a tax on chrome ore exports, arguing that the collapse of the domestic ferrochrome industry is rooted in crippling electricity tariffs—not the availability or pricing of the ore itself. The pushback comes as the Glencore-Merafe JV ferrochrome smelter starts significant retrenchments, with Samancor Chrome also facing possible closure, highlighting the deep distress in the value chain.
The Minerals Council South Africa, representing industry employers, contends that the primary factor rendering local smelters uncompetitive and unprofitable is the over 900% increase in electricity tariffs since 2008. This steep rise, combined with persistent logistical inefficiencies at ports and rail, has left beneficiation operations struggling, even with marginal recent improvements in transport conditions. The industry consensus is stark: chrome ore price and supply are not the cause of smelter closures or suspensions.
Despite industry opposition, the Cabinet in October made a decision to revive the chrome sector, inviting comments on a proposal to “place chrome ore under export control” via the International Trade Administration Commission. Government officials argue that this and other proposed interventions are “designed to improve the long-term viability and competitiveness of the chrome value chain in the Republic of South Africa.”
However, both primary chrome miners and integrated producers, who generate chrome ore from their platinum group metals mines, stand united in their opposition to the proposed export tax. They argue that any intervention, beyond a critical electricity tariff adjustment, must be balanced and equitable, supporting the competitiveness of both chrome mining and ferrochrome production. They stressed that “no trade measures, including a chrome ore export tax or quotas, will restore meaningful viability” to the country’s ferroalloy smelters without addressing the fundamental electricity cost burden. Miners and smelters thus reject the export tax or restrictions, stating these would merely “harm chrome ore producers without materially assisting smelter recovery.”
The path to recovery, according to the Minerals Council, is unambiguous: “the sustainable provision of electricity at globally competitive tariffs,” not measures that disadvantage non-integrated producers. In a proactive move, ferrochrome smelter operators, led by Glencore and Samancor Chrome, have advanced a proposed solution that does not require a government subsidy. The plan focuses on the long-term acquisition of renewable energy to reduce reliance on Eskom and help local producers minimise exposure to the European Union’s Carbon Border Adjustment Mechanism (CBAM) penalties. Additional industry-supported measures include a potential reduction or temporary suspension of the domestic carbon tax.
Furthermore, industry players have committed to tackling the challenge of illegal chrome mining, which is estimated to generate R8 billion annually and accounts for about 10% of South Africa’s chrome ore exports. They argue this requires robust policy and legal interventions from the government, including enhanced border controls and stricter, consistently enforced regulations. Finally, the Minerals Council and other stakeholders have proposed jointly developing a beneficiation roadmap with the government to promote industrialisation, factoring in incentives and creating a conducive regulatory environment that encourages investment in exploration and mine development.
