South African chrome producers have called on the government to restore their sector’s competitive edge by drawing up a “beneficiation roadmap” for the critical mineral.
The request comes as local chrome miners and smelters continue to reject the government’s call for a chrome ore export tax.
While proponents argue that the tax would help South Africa claw back its chrome beneficiation market share from China, the Minerals Council South Africa argues that the real issue is uncompetitive electricity prices.
In a statement this week, the council, which represents the interests of 90% of South Africa’s mining industry, proposed collaborating with the Ferro Alloy Producers Association, with the state, on a blueprint to grow the chrome sector.
The two lobby groups agreed that the heart of the issue with South Africa’s chrome exports was not a lack of export controls but the unaffordability of power, said the council.
“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,” said council spokesperson Allan Seccombe.
“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.”
While reiterating the call for lower energy prices, the council said a clear beneficiation plan would help to tease out other policy interventions or incentives to encourage downstream industrialisation.
This might include a “reduction or temporary suspension” of carbon taxes imposed on smelters or measures to encourage more renewable energy installation.
The roadmap could also detail potential police interventions or border controls to address South Africa’s thriving black market for chrome, said the council, with estimates that illegal chrome mining generates about R8bn a year and comprises a tenth of SA’s total chrome exports.
Mines minister Gwede Mantashe has acknowledged that a chrome ore export tax on its own is a “blunt instrument”, saying in October that its introduction would have to go hand in hand with developing the country’s smelting capacity.
Since 2007 electricity tariffs have increased 937% on average, more than six times consumer inflation over the same period.
The decline of local chrome beneficiation has led to droves of idle ferrochrome smelters countrywide, costing the fiscus billions in missed revenue and causing the loss of thousands of jobs.
This week, the Glencore-Merafe chrome venture confirmed that it was proceeding with about 2,500 retrenchments at its Wonderkop and Boshoek smelters as they wind down to care and maintenance from 2026.
The venture, which produces about a third of South Africa’s annual exports, had already let go of 1,800 workers in the past four years due to unsustainable electricity costs.
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