CHROME ore export levies are squarely on the South African government’s agenda after earlier indicating they were “a blunt tool”.
A target set down in the reChrome export levy resurfaces in new industrial strategyvised Industrial Development Strategy, approved by Cabinet last week and published on Monday, is to: “Institute [an] export tax and quota for the chrome industry”. This would be done through the department of trade industry and competition and the International Trade Administration Commission (Itac) which was previously the nominated gatekeeper for export licence applications.
Elsewhere in the strategy document, Goverment plans to: “Institute the tariffs or negotiated pricing agreement for the chrome sector”. It also wants to designate “Bojanala and Fetakgomo-Tubatse SEZs for beneficiation of chrome”. These SEZs are situated in the Sekhukhune District in Limpopo province, the focus for platinum group metals production.
Imposing export levies on chrome ore exports has been a preferred goal of the Government for more than a decade, but it has never seen light of day, partly owing to the opposition of industry which has pointed to electricity price inflation as a disincentive to beneficiation.
Mines and energy minister Gwede Mantashe appeared to accept this message last year after the government had earlier planned for a 25% levy on chrome exports.
He said in Parliament in October that: “The department notes that the chrome tax, in isolation, is considered a blunt instrument”, although he didn’t dismiss it provided it was “supported by complementary measures”, thought to include a cut in the power tariff.
Earlier this month, South Africa’s energy regulator Nersa approved a reduction in the tariff to ferrochrome producers to 62 cent per kiloWatt hours, far lower than an earlier preferential power agreement of 87c/kWh.
Mantashe added last year: “The department is engaged in an ongoing collaborative process with various stakeholders, including the Minerals Council SA and primary chrome producers, to support local smelting capacity.
“These consultations inform the coordinated approach to determine whether the tax’s implementation is warranted,” Mantashe said.
The Minerals Council South Africa appeared surprised by the IDS statement. It said in response to Miningmx questions today that it was studying the document which had only been just published.
Minerals Council has opposed the introduction of an export tariff on chrome ore exports, arguing the supply of chrome ore for the ferrochrome industry was not the problem. “The more than 900% increase in electricity tariffs since 2008 is the primary reason behind the closure of smelters,” said Allan Seccombe, spokesperson for the council.
A chrome tax is follows comments by the Minerals Council at its annual general meeting last month in which it expressed concerns about policy surprises and the much-delayed implementation of the minerals cadastre.
