Trade, Industry and Competition Minister Parks Tau has initiated a process to regulate chrome exports, following a cabinet decision aimed at combating rampant illegal mining of this critical mineral. On 6 October, Tau announced the move to place chrome ore under export control by the International Trade Administration Commission of South Africa (Itac), emphasizing its strategic importance in supporting South Africa’s industrialization and mineral beneficiation goals.
The government notice directs Itac to create a permit processing system for chrome ore exports. Under this system, exporters must apply for an export permit before shipping any chrome ore. If the application is properly completed and meets all requirements, Itac will issue the necessary permits.
This regulatory action comes in response to industry concerns, as estimates indicate that illegally mined chrome constitutes about 10% of the total chrome mined in South Africa, equating to approximately 2.7 million tonnes annually. Additionally, the government is considering imposing a 25% tax on raw chrome exports to protect the local ferrochrome industry, which is struggling with escalating electricity costs.
South Africa holds 70% to 80% of the world’s chrome ore reserves, yet its ferrochrome production capacity is declining due to high energy costs and illegal mining activities. The country’s high electricity costs have made it challenging for producers to beneficiate raw chrome into ferrochrome, a key ingredient in stainless steel production.
Tau’s notice also invites public comments on the proposed chrome export regulations by the end of the month, highlighting the sector’s vital contribution to the mining and industrial landscape in South Africa. The chrome industry employs thousands but has faced a steady decline attributed to rising electricity costs, global market pressures, and unregulated raw chrome exports.
In light of these challenges, the cabinet has endorsed a coordinated intervention involving government and industry stakeholders to stabilize and revitalize the chrome value chain. Many smelters in South Africa have idled, impacting the beneficiation of chrome ore as local producers like Glencore Alloys and Samancor struggle with high energy costs. China has emerged as a dominant player in the global ferrochrome market, filling the gap left by South African producers.
Electricity costs in South Africa have surged more than 800% since 2007, significantly impacting the mining sector, which accounts for about 8% of the country’s GDP. A Boston Consulting Group study noted that South Africa’s energy costs rank among the highest in comparable mining jurisdictions, making it difficult for local companies to compete.
Electricity and Energy Minister Kgosientsho Ramokgopa has engaged with the chrome industry to find sustainable solutions in line with the cabinet’s June directive. The ferroalloys sector, vital for local manufacturing and steel production, has seen job losses exceeding 300,000 due to the closure of 14 energy-intensive smelters. The chair of the Ferroalloys Producers Association, Nellis Bester, emphasized the necessity of a competitive tariff structure to ensure the industry’s survival.