SA is Responsible for More Than 80% of Chrome Ore Exports

South Africa is one of the world’s largest producers of ferrochrome and the industry could have a vital role to play in the country’s pandemic recovery, if its challenges can be successfully addressed. 

Currently, the country exports 84% of ferrochrome to China, with Turkey and Zimbabwe, for example, producing smaller amounts. There has been concern that an export tax would mean other countries would be able to offer ferrochrome at cheaper prices than South Africa, with the country losing significant market share in the process. While China sources most of its chrome ore from South Africa, this could change if the product was available cheaper from other countries. However, it has also been noted that it would be difficult to China to move away from the type of ferrochrome it imports from South Africa. Chrome ore production has grown by 50% over the last five years and close to 60% of all chrome ore is exported, with most of these exports going to China.

How Export Tax Will Affect Other Players in The Industry

Others in the industry, however, welcome the reprieve that an export tax would provide. India has implemented a successful export tax for chrome ore, which has resulted in an increased tax base, higher investment in the industry, benefits to the local communities and skills development.

There are no economically viable sources of chrome ore internationally that can replace the volume of South African ore. South Africa exports about 13.6-million tonnes of chrome ore a year, from a total production of 22.7-million tonnes, with the chrome mining industry employing about 22 904 people, of whom just under half are employed by non-integrated chrome producers, alongside integrated producers and UG2 producers of chrome

Ultimately, industrialisation and heavy industry generate considerable GDP, bring in considerable foreign income and support a wider range of skills development. The ferrochrome sector, moreover, has existing paid-for infrastructure in place upon which a competitive new advance can take place and advance.

The industry has also committed itself to supporting upstream- and downstream-dependent business, developing new junior hard coal miners, pre-financing already-approved reductant projects, lowering dependence on imported metallurgical coal by encouraging local production, and providing more competitive pricing to local ferrochrome consumers than export customers.