On October, 22 South-Africa’s government has announced its intension to impose export tax on chromium ore, aiming to encourage domestic ferrochrome producers. In addition, the country’s cabinet proposed to use energy efficiency technologies on smelters, adopt cogeneration and self-generation technologies, which also might support South-African ferrochrome producers.
Despite the good intensions of government, the news about potential intervention have caused concerns among market insiders. Above all, the proposed export tax would drive up the costs for South-African chrome ore producers to export, forcing them to supply raw materials to the local ferrochrome producers instead of exporting. Demand reduction for South African chrome ore from importers is also likely to happen in case of increased costs, South African chrome ore producers are concerned. It is still unknown the size of export duty and the implementation date though.
It is worth mentioning, that shares of South-Africa’s ferrochrome producer Merafe Resources, which has a joint venture with Glencore, jumped more than 20 percent on news of the proposed export tax.