CHROMESA, an industry association representing the interests of South African chrome producers such as Anglo American Platinum and Sibanye-Stillwater, has hit out at claims there may be benefits from a Government proposed tax on chrome ore exports.
It also referred to “egregious misconceptions, omissions and inaccuracies contained in media reports”, regarding Government’s tax which it also said lacked sufficient state engagement. “ChromeSA is calling for a comprehensive and transparent engagement process with all affected parties before the proposal is developed any further,” it said.
The proposed tax on chrome ore exports was made public following a South African government Cabinet meeting in October, but little detail was provided. ChromeSA said benefits flowing from the tax would be “speculative” and contained “incorrect assumptions”.
One incorrect assumption was that South Africa’s dominance in the chrome ore market would protect it against substitution from cheaper suppliers, said ChromeSA. Currently, China sources the majority of its chrome from South Africa for its stainless steel industry.
But ChromeSA said: “International chrome ore producers have excess capacity which can replace South African chrome ore in sufficient volumes to cause harm to South African chrome ore producers.”
The association added that a chrome ore tax wouldn’t necessarily improve the competitiveness of the South African ferrochrome sector because Chinese stainless steel producers might import ferrochrome from other more competitive suppliers.
“So, while the benefits of the proposed tax are entirely speculative, the cost that would be imposed on non-integrated chrome ore producers is certain, direct and will have significant negative output and employment impacts,” said ChromeSA.