ChromeSA on July 7 maintained that “destroying another industry” – referring to the majority of South Africa’s chrome ore producers – is “not a solution” to challenges faced by SaveSA Smelters, a group which represents individuals and companies negatively impacted by the current state of the South African ferrochrome sector.
Commentary over the last few weeks from SaveSA Smelters indicates that the group’s position focusses on the demand that government immediately implement a proposed chrome ore export tax of between 20% and 80%, depending on the type of chrome ore being exported.
ChromeSA said it sympathises with the difficulties facing the ferrochrome sector and that it “remains open to engaging with the ferrochrome industry”.
However, the association remains adamant that a chrome ore export tax “will be devastating” for independent chrome ore producers who rely almost entirely on exports and who employ more than 43 000 workers.
It said in a statement that the proposed chrome ore export tax “will not provide the expected relief to the South African ferrochrome industry”, adding that any relief that is generated through such a tax would, in its view, “be short-lived at best”.
ChromeSA’s detailed analysis revealed that a chrome ore export tax would, on balance, have a negative impact on South African employment, communities and investment in the mining industry, the statement noted.
ChromeSA believes there are other measures that government should instead be contemplating to improve the South African ferrochrome industry’s sustainable long-term outlook.
“This is particularly true in respect of progressive access to competitively priced electricity inputs,” it said.
Mining Weekly previously reported that the plight of the domestic smelting industry has persuaded government to revisit the tax on chrome ore exports, which it hopes will make domestic capacity more competitive against Chinese production.
China’s growing demand for by-product upper group two chrome ore and the rapidly increasing electricity tariffs in South Africa have supported the development of ferrochrome smelting capacity in China.
The ferrochrome industry believes the proposed tax will increase smelting costs in China, tipping them in favour of South African smelters.
However, there are concerns that the tax could erode global market share for South Africa’s conventional chromite miners, “as it will make them less competitive on a global basis”.