Competition authorities have given the go-ahead for Glencore and Sibanye Stillwater to merge several of their chrome recovery operations as the state moves to protect the local chrome industry.
The agreement, which the mining giants expect to boost their output of chrome and help optimise value from future production of the ore, comes at a time when chrome is taking centre stage in the country’s critical mineral debate.
SA is home to about 70%-80% of the world’s chrome, a mineral deemed critical by the government because of its strategic significance and the potential for beneficiation.
Chrome ore is mainly used in the production of ferrochrome, an essential ingredient in steelmaking, and increasingly in the production of chromium batteries.
However, soaring electricity costs and a thriving black market have taken a toll on local chrome processors in recent years, putting the country at risk of missing out on the critical mineral boom.
The Competition Commission approval coincides with a period of regulatory shake-ups, with the government last week beginning the process of placing chrome ore under export control in an attempt to salvage the local sector's declining competitive position.
Business Day reported that trade, industry & competition minister Parks Tau last week announced that chrome ore would be placed under export control by the International Trade Administration Commission (Itac), in light of estimates that illegally mined chrome now accounts for 10% of all chrome mined in the country each year, or about 2.7-million tonnes per year.
The Sunday Times reported that the government is mulling a 25% tax on exports of raw chrome to protect the local ferrochrome industry, which is battling surging electricity costs.
Earlier this year, Glencore said that high electricity prices had made it more viable to export raw chrome ore out of SA than to smelt it into ferrochrome locally.
While their managerial oversight will be consolidated, the chrome recovery plants in question will continue under their current ownership, with some plants being owned by Sibanye and others by the Glencore-Merafe joint venture.
The joint venture, which produces about 2.3-million tonnes (or roughly a third of SA's annual exports) of ferrochrome a year, has already closed 10 of its 22 furnaces over the past four years thanks to unsustainable electricity costs, resulting in the loss of 1,800 jobs.
Business Day reported that the ANC’s 10-point economic action plan, adopted by its national executive committee (NEC) meetings over the weekend, aims to unlock more value from the chrome industry through trade tools and industrial energy relief.
Preferential electricity tariffs, export controls and infrastructure investment in the chrome industry were among the policy approaches outlined in the plan.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.