South Africa Smelter Restart Tightens Global Chrome Market
South Africa’s ferrochrome industry is restarting mothballed smelting capacity after a new power-tariff agreement sharply reduced electricity costs, a move that is set to reshape chrome ore flows and intensify pressure on producers in India and China.
The agreement cut power costs by 54% to 62 cents per kilowatt-hour, enabling Glencore-Merafe and Samancor Chrome to bring idled furnaces back online. Lion smelter has already resumed production, while Boshoek and Wonderkop are expected to return by November. The restart restores roughly 4.5 million tonnes per year of domestic ferrochrome capacity.
The change is already affecting the raw-material market. South African producers are expected to divert an estimated 800,000 to 1 million tonnes of chrome ore per month away from export markets, primarily China, and into local furnaces. That redirection could tighten availability for buyers outside South Africa just as producers across the supply chain adjust to a new balance between ore and alloy trade.
India is particularly exposed to the shift. Electricity accounts for about 30% to 40% of ferrochrome production costs in India, while chrome ore prices at state auctions have more than doubled since 2021. With South Africa absorbing more ore and China pursuing greater supply self-sufficiency, India’s ferrochrome exports to China have fallen sharply—from 830,000 tonnes in 2023 to about 100,000 tonnes in 2025.
Indian producers are consequently pivoting toward domestic stainless steel demand and more specialized refined grades. The shift reflects both higher input costs and a shrinking role in China’s ferrochrome supply chain.
China, meanwhile, faces a margin squeeze. The country imports more than 80% of its nearly 20 million tonnes of annual chrome ore requirement from South Africa. If more South African ore is consumed domestically, Chinese ferrochrome producers will face higher raw-material costs while stainless steel demand remains weak, putting further pressure on margins.
Chinese companies are responding by moving upstream and broadening their supply options. Major players including Tsingshan and Baowu are investing in smelting joint ventures in South Africa and Zimbabwe to secure offtake rights. China is also increasing imports from Kazakhstan and Turkey, shifting from raw ore toward finished ferrochrome alloy, and upgrading domestic furnaces to improve energy efficiency.
The South African restart therefore reaches beyond a single country’s power market. By bringing back substantial smelting capacity and redirecting ore into domestic production, it is tightening the international raw-material pool, challenging India’s export model and accelerating China’s push to secure more control over ferrochrome supply.
By Jessica Long