Government has approved a preferential electricity tariff for South Africa’s ferrochrome sector as part of a package of interventions addressing rising energy costs and declining industrial competitiveness.
The decision, confirmed after a recent Cabinet meeting, is part of a broader strategy to stabilise the sector. It includes three measures:
- A preferential electricity tariff
- Enhanced chrome ore export controls
- Development of a chrome export tax
The Minerals Council South Africa notes that electricity prices have increased by nearly 900% over the past two decades, making local smelting operations uncompetitive. As a result, chrome concentrate is increasingly exported rather than beneficiated domestically.
South Africa remains the world’s largest producer of chrome concentrate but has lost its position as the leading ferrochrome supplier to China where electricity and labour costs are lower. The Minerals Council says local smelters have been mothballed or shut down in recent years – unable to compete with China’s subsidised energy prices.
While the Minerals Council welcomes the electricity tariff relief, it cautions that no formal consultation took place regarding the new measures, and further detail on tariff structure and implementation is still required.
The Minerals Council is also concerned about the proposed export tax on chrome concentrate, warning that it may harm producers without effectively supporting ferrochrome beneficiation.
The National Union of Metal Workers of South Africa warned in January this year that high electricity costs will continue to cripple the South African manufacturing sector.
