SouthAfrica News： Reports started circulating that the South African government, after planning to impose export restrictions, is thinking about a 25% export tax on chrome ore. And, as justification for such a large tax is that it would stop illegal mining and exports and help the domestic chrome industry. 

A 25% tax should only provide increased incentives to illegally mine and export chrome ore since it would make it more lucrative. Also, South Africa is well know for graft and bribery. Probably exceptions will be made for favored groups or with people willing to provide “gratitudes.”

 As for helping the domestic ferrochrome industry, Samancor is the largest ferrochrome producer and is fully integrated. Glencore also has its own mines and its chrome ore sales have kept its ferrochrome industry alive in recent years. And any new smelters, except owned and controlled by Chinese interests, are a dream.

The country’s chrome miners would be the most effected, however. While China will probably remain the major export target, the country’s domestic smelters would start looking elsewhere for cheaper ore. Foreign miners would raise their prices but probably at a discount to the South African prices. Also higher ore prices mean more chrome ore from other locations.

If South Africa was serious about an export tax why not on all ore exports including manganese and iron ore. The country’s manganese smelters have been reduced to one small exporter--Transalloys— and its steel mills are an endangered specie. 

Finally, the money from the export tax would go to the government not the miners. As a result, while chrome ore prices would increase the non-South African miners would see their profits jump while the South African miners would get NOTHING. 

The doesn’t mean a tax couldn’t be useful but at a more reasonable level, with some of the money returned to the miners.  

• [Editor:admin]