South African Govt approves export tax on chrome ore to protect its ferro chrome industry

In what should certainly qualify as a watershed moment in the history of the Chromite industry, South Africa's cabinet has approved an export tax on chrome ore.

South African (SA) cabinet has approved an export tax on Chrome Ore, although the percentage of an export tax is yet to be announced. "The interventions include the proposed introduction of the export tax on chrome ore, the usage of energy efficiency technologies on smelters, and the adoption of cogeneration and self-generation technologies," said Minister in the Presidency Jackson Mthembu, reading the statement.

South Africa (SA) is the largest producer and exporter of chrome ore in the world. In 2019, it produced 20 mn t out of the total global production of 34 mn t. China is the biggest producer and importer of ferro chrome without having chrome ore reserves. China relies almost entirely on chrome ore imports from South Africa, constituting to almost 85% of its total imports. In 2019, China produced 6 mn t of ferro chrome out of the total global production of 13.7 mn t.

In the past three years, 40% of South Africa's ferro alloys capacity has been idled because it is no longer competitive, primarily due to a more than sixfold increase in electricity tariffs. Electricity accounts for up to half of the cost of running a furnace.

The imposition of an export tax on South Africa chrome ore is taken to protect the domestic ferro chrome industry that was struggling to cope with high power tariffs. This will lead to higher chrome ore import prices for the Chinese and increase their cost of ferro chrome production, making imports of ferro chrome more feasible. It will surely give a sigh of relief to the Indian ferro chrome producers that are set to deal with rising chrome prices themselves after the settlement of the mining auctions