Chrome producers unite against proposed export tax
South Africa’s chrome ore producers and ferrochrome smelters have issued a united rejection of proposals for a chrome ore export tax, arguing that the country’s struggling smelter sector cannot recover without one critical intervention: globally competitive electricity tariffs.
Represented by the Ferro Alloy Producers Association (FAPA), chrome miners—both primary producers and those generating chrome ore as a by-product of platinum mining—joined integrated ferrochrome producers in emphasising that electricity prices, not ore availability, are responsible for the widespread closure and suspension of South African smelters.
Since 2008, electricity tariffs have risen by more than 900%, eroding the competitiveness of domestic smelters and making operations unprofitable. The industry argues that no trade restriction, including export taxes or quotas on chrome ore, can offset this structural cost challenge.
A critical export sector under pressure
Chrome ore and ferrochrome represent two of South Africa’s most strategically important mineral exports. South Africa is the world’s largest producer of chrome ore and a major supplier of ferrochrome—a key input in stainless steel production globally. The industry supports tens of thousands of jobs, contributes significantly to export revenue, and anchors industrial activity in several mining regions.
Any reduction in chrome ore exports or long-term deterioration in smelter capacity would have direct implications for South Africa’s export competitiveness and trade balance.
FAPA and chrome producers argue that proposed export taxes would damage non-integrated miners—who rely heavily on export markets—without restoring smelter viability. They warn that undermining ore producers could reduce overall supply, weaken the industry, and discourage investment.
Electricity costs: The core challenge
Both smelter operators and miners agree that restarting idled ferrochrome, silicon and manganese smelters requires cost-reflective and globally competitive electricity tariffs.
“Trade restrictions will not fix an electricity problem,” the statement notes, emphasising that without meaningful tariff reform, the sector cannot regain competitiveness.
Industry leaders point to proposals by Glencore and Samancor Chrome for a solution requiring no government subsidy but enabling smelters to access more stable, affordable power.
Renewable energy and CBAM: Future pressures and opportunities
Ferrochrome smelters are also exploring renewable energy solutions to reduce reliance on Eskom in the long term. While implementation will take time, renewables offer the dual benefit of lower costs and reduced exposure to the European Union’s Carbon Border Adjustment Mechanism (CBAM).
What is CBAM?
CBAM is the European Union’s carbon-import levy designed to ensure that imported goods face the same carbon costs as EU-produced goods. It targets carbon-intensive products such as steel, cement, aluminium – and critically for South Africa – ferroalloys and ferrochrome.
Under CBAM, exporters must report embedded carbon emissions and may be required to purchase carbon certificates to offset them. For South Africa, where electricity generation is emissions-intensive, CBAM poses three key risks:
- Reduced competitiveness for ferrochrome exports into Europe.
- Higher compliance costs, particularly for smelters powered by coal-based electricity.
- Incentives for buyers to shift to lower-carbon suppliers unless South African producers adapt.
The shift to renewable energy could help reduce CBAM-related penalties and maintain market access, especially as Europe is a significant buyer of mineral and metal inputs.
Industry calls for rapid action on illegal mining
FAPA and non-integrated chrome producers also highlighted illegal chrome mining—estimated at R8 billion per year and responsible for around 10% of the country’s chrome ore exports—as a major threat to market stability and state revenue. The industry is calling for strengthened law enforcement, improved border management, and consistent regulatory enforcement to curb illegal activity.
A joint roadmap for industrialisation
The Minerals Council South Africa, FAPA, and their members have proposed working with government to develop a comprehensive beneficiation roadmap. The plan would outline measures to support exploration, mine development, smelting capacity, and downstream industrialisation.
Such a roadmap, industry leaders argue, is essential to retaining South Africa’s position as a global chrome leader, safeguarding export revenues, and ensuring long-term industrial competitiveness.
A crossroads for a strategic export industry
The chrome and ferrochrome sector sits at the centre of South Africa’s mineral export portfolio. With global demand for stainless steel rising, South Africa remains well positioned – provided it resolves its electricity cost constraints and adapts to emerging international trade mechanisms like CBAM.
Industry leaders are clear: competitive electricity tariffs, modernised energy solutions, and collaborative policy development are the only viable path to reviving domestic smelters and securing South Africa’s role in global mineral value chains.
As global trade partners push for cleaner supply chains and more reliable sources of critical inputs, South Africa’s response today will shape its export competitiveness for the next generation.
