Chrome producers and ferrochrome smelters rejects chrome ore export tax

Chrome ore producers, represented by the Ferro Alloy Producers Association (FAPA), are aligned on the fundamental need for globally competitive electricity prices as the primary intervention required to restart idled smelters.

The industry remains united in its commitment to safeguard the ferrochrome and broader
ferroalloy sector, to continue adding value to South Africa’s mineral endowment, and to
support domestic manufacturers. Any interventions in addition to an electricity tariff
adjustment must be balanced, equitable and supportive of the competitiveness of both chrome
mining and ferrochrome beneficiation.

Both groups are clear that the price and availability of chrome ore is not the cause of South
Africa’s ferrochrome smelter closures or suspensions. Instead, the more than 900% increase
in electricity tariffs since 2008 has rendered domestic smelters uncompetitive and unprofitable
Without an intervention that directly addresses the electricity cost burden, no trade measures,
including a chrome ore export tax or quotas, will restore meaningful viability to the country’s
ferroalloy smelters. Both miners and smelters, therefore, reject recently mooted calls for an
export tax or restrictions, as these would harm chrome ore producers without materially
assisting smelter recovery.

The solution for restarting ferrochrome, silicon and manganese smelters is clear: the
sustainable provision of electricity at globally competitive tariffs, not measures that
disadvantage non-integrated chrome, manganese and silica producers. Glencore and
Samancor Chrome, both operators of ferrochrome smelters, have already proposed a solution
requiring no subsidies from government, Eskom or other mining companies.

Smelter operators are exploring the acquisition of renewable energy as a longer-term solution.
While this will take time to implement, it will reduce reliance on Eskom and position South
Africa’s ferroalloy producers to minimise exposure to Carbon Border Adjustment Mechanism
(CBAM) penalties.

Additional measures that could support ferroalloy production include a reduction or temporary
suspension of the domestic carbon tax applied to smelters. FAPA and non-integrated chrome producers also agree on the urgent need to eradicate illegal chrome mining, which generates an estimated R8 billion per year and accounts for roughly 10% of South Africa’s chrome ore exports. This requires comprehensive intervention by law enforcement agencies, enhanced border controls and stricter, consistently enforced regulations.

The Minerals Council, its members and FAPA, with its members, propose jointly developing a
beneficiation roadmap with the Government to fully understand and enact the measures that
will encourage industrialisation, incentives and a conducive regulatory environment that
encourages and sustains investment in exploration, mine development, existing mines as well
as downstream industrialisation using minerals and metals.