JOHANNESBURG (miningweekly.com) – South Africa needs both a competitive mining sector and a strong manufacturing base but supporting one sector by undermining another is an unsustainable strategy, Chrome SA cautions in a comprehensive media release in which it emphasises its willingness to work with government to create a policy environment where mining and manufacturing can thrive, but that this has to take place within framework of competitive electricity pricing, reliable electricity supply, and globally competitive investment conditions.

Viewed by Chrome SA as an unsustainable strategy are the proposed chrome export taxes and quotas to encourage the sale of chrome ore locally and thereby the revival of South Africa’s struggling ferrochrome smelting industry, which uses chrome ore to produce ferrochrome, a key ingredient in the manufacture of stainless steel.

The members of Chrome SA are Assore, Sibanye-Stillwater, Tharisa, Valterra Platinum, Northam Platinum, Siyanda Resources, ChromTech, Pelagic Resources, Impala Platinum and Jubilee Metals.

The organisation makes it clear that the chrome ore mining industry is ready to be part of a solution but only with the introduction of:

• competitive power tariffs that allow energy-intensive industries to compete globally;
• reliable power supply, underpinned by investment in Eskom’s recovery and diversified new generation;
• regulatory certainty for self-generation and renewable projects by mines and smelters, enabling them to take charge of their own energy future; and
• a coherent industrial strategy that fosters both upstream mining and downstream beneficiation, without sacrificing one for the other.

The decline of South Africa’s ferrochrome sector, it says, is not the result of expensive chrome ore but rather the up-to-three-times-more that South Africa's ferrochrome producers are having to pay for electricity than their global competitors.

“No amount of tweaking ore prices or imposing export restrictions will change the fact that uncompetitive power costs have crippled the sector. Unless electricity pricing is addressed, local smelters will remain unviable – regardless of what happens to ore exports,” Chrome SA accentuates.

Export restrictions, quotas or taxes would, it adds, cut into already thin margins for chrome ore mining companies, which employ more than 25 000 people, while sustaining thousands more jobs in surrounding communities through procurement, services and household spending.

In 2024, chrome ore exports generated more than R84-billion in foreign exchange earnings for South Africa and curtailing exports would directly reduce foreign currency inflows as well as tax revenues, at a time when the fiscus can least afford it.

Against that background, Chrome SA emphasises its willingness to work with government to create a policy environment where mining and manufacturing can thrive but only within a framework of competitive electricity pricing, reliable electricity supply, and globally competitive investment conditions.

LOW ELECTRICITY BREAKTHROUGH

It is interesting to report that a new proven smelting technology, which has the potential to reverse the widespread closure of ferroalloy smelting operations owing to the high price of electricity, is now ready to be commercialised.

SmeltDirect, already bankable, saves more than 70% of electricity consumption needed for smelting, reduces carbon emissions by about 60%, puts users at the bottom of the cost curve, and can be used to produce green steel as well.

Unlike the 4 MW required by conventional systems, only 1.2 MW of electricity is needed to produce a ton of alloy, and some 700 jobs are created for every 200 000 t of alloy produced a year. As a result, SmeltDirect has attracted global attention.

The Johannesburg Stock Exchange-listed diversified mining company African Rainbow Minerals (ARM), headed by executive chairperson Dr Patrice Motsepe, has brought SmeltDirect to the fore to help South Africa to win back the market share that it has lost in the ferroalloy business it once led.

ARM's Machadodorp Works, in Mpumalanga, is a facility focused on commercialising SmeltDirect to enable ores to be processed in the countries where they are mined, resulting in tons transported to markets being effectively halved.

In the early 2000s South Africa, which hosts more than 70% of the world reserves of chrome ore and manganese ores, was the undisputed No 1 chrome ore- and ferrochrome-producing country, with 90% of the inputs, including technology and equipment, locally sourced. More than 200 000 direct and indirect jobs were created across the chrome value chain alone and 20% of mining-related foreign exchange was earned from ferrochrome sales.

In 2010, the chrome value chain contributed R42-billion to South Africa’s GDP and generated R36-billion worth of foreign exchange earnings, with ferrochrome production contributing 80% of the value of the chrome value chain.