S.Africa’s Cabinet approves chrome export restrictions
South Africa’s Cabinet has approved a series of export restrictions on chrome ore in a last-minute bid to save the country’s vanishing ferro alloys industry.
The Cabinet this week backed measures proposed by the Department of Electricity and Energy that included raw ore export controls, new export taxes, and lower power tariffs for ferro alloy producers.
“Cabinet approved the placement of chrome ore under export control, which will require exports to obtain the International Trade Administration Commission (ITAC) permitting,” said a government document obtained by McCloskey.
“Cabinet approved the initiative to develop a chrome ore export tax and expand the Special Economic Zone (SEZ) smelters incentives framework/regulations.”
The Cabinet also approved a government-industry agreement for a “tariff re-alignment” in support of the ferro chrome sector.
Further details were not immediately available.
The measures will be welcomed by ferro alloy producers, who have been lobbying the government to quickly introduce raw ore export restrictions to save the industry.
“We need to ban the export of ores,” a South African ferro chrome producer told McCloskey. “Unless we start controlling what is going out of the country, we are going to have a major problem in terms of alloy production.”
The smelting industry has been hit hard in South Africa with more than half of the country’s 59 chrome furnaces shut in recent years due to high electricity costs and weak market conditions. This has left South African with just manganese and chrome ore to export, instead of higher priced ferro alloys.
However, some ferro alloy producers are concerned the measures won’t be enough because of China’s dominance in the market.
“We have explained to them that China looks at our production costs, then they set the price according to the cost calculations so that whoever is exporting into China barely makes a profit,” the ferro alloys producer explained.
“It is important for industry to survive with lower energy prices, but in the long term, we will only be subsidizing the Chinese industry because they would simply lower their prices and ultimately, they will have cheaper imports.”
Glencore, the country’s largest ferro chrome producer, has also shut its two smelters with the recent Lion smelter currently under care and maintenance. Industry sources told McCloskey that although they are considering retrofitting new smelting technology to revive their plants, “they can only move when the government starts restricting ore exports.”
The ferro chrome producer said that South Africa should emulate Zimbabwe’s local value-add strategy. “We can tell the Chinese that over a period of five years, we are going to reduce raw ore exports and if you want our chrome you need to come and invest here and smelt it.”
In 2023, Zimbabwe announced the export ban of its raw critical minerals, including chrome and lithium. It also recently announced that miners applying for a mining license for more than a 100 hectares would only be granted one if they had local beneficiation plans.
Thus far, this has attracted Chinese investors to set up smelting plants there to ensure local processing while securing supply.
“The regulatory environment in South Africa is a lot more difficult to overcome whereas within Zimbabwe, because the leaders there are vested and have so much control over what happens in the state, they can override a lot of these challenges.” said Andrew McFarlane, metal processing commentator from AMETEX.
“South Africa needs to free up the regulatory environment, provide reliable energy at a lower price and improve the technological efficiency of manufacturing plants as a lot of them are fairly old, while the Chinese equipment is newer and more efficient.”
While South Africa’s Minister of Minerals Gwede Mantashe has mentioned that the restriction of raw ores could be on the cards, regulatory aspects will indicate the timeline of these implementations.