DTIC’s latest development strategy adds to policy uncertainty: Minerals Council SA

The Minerals Council SA, which represents 90% of South Africa’s mining output by value, says it will “engage” policy makers after the government published its push for export chrome taxes and quotas contained in South Africa’s Industrial Development Strategy 2026.

Penned by the department of trade industry and competition (DTIC), the document published on Monday, introduces chrome tariffs as part of the government’s support for local beneficiation and industrial strategies.

According to the strategy, South Africa should take advantage of its competitive advantages including its mineral endowment that will pave the way for the production of critical minerals required for the just energy transition.

It also imposes tariffs or negotiated price agreements for the chrome industry with the aim of reducing the cost of chrome beneficiation while attracting investors to the Bojanala and Fetakgomo-Tubatse special economic zones to reduce the exports of raw chrome in favour of expanding local chrome beneficiation.

The document comes as South Africa, which has the highest chrome reserves, has grappled with high power costs and stiff competition from China and rising illegal mining making the industry uncompetitive.

Commenting on the document, Minerals Council CEO Mzila Mthenjane said policy intention from the DTIC further fuelled the incessant policy uncertainty that is constraining investment and growth of the mining industry and economy.

Electricity tariff increases of more than 900% since 2008 have made South Africa’s ferroalloys industry globally uncompetitive and shut unprofitable smelters. The de-industrialisation trajectory is also attributable in part to unaffordable electricity

—  Mzila Mthenjane, Minerals Council CEO

The proposal regarding the issuance of mining rights with “conditions that must facilitate beneficiation” could potentially damage future investments in exploration and mining.

“Mining and beneficiation are separate and distinct economic sectors in the mineral value chain. Beneficiation cannot, and must not, be imposed on mining because beneficiation forms part of manufacturing and overall industrialisation. As such, specific measures must be introduced to incentivise and attract investments to stimulate industrialisation and the diversification of our economy,” said Mthenjane.

Mthenjane said the council is talking to the department of mineral and petroleum resources about the contents of the Mineral Resources Development Bill to ensure mining laws make South Africa a globally competitive exploration and mining jurisdiction, attracting investment, growth and creating job opportunities.

The council has been at pains to halt the introduction of tariffs saying that the rising cost of electricity had been the root cause for the challenges facing ferrochrome smelters.

Mthenjane said the supply of chrome ore for South Africa’s ferrochrome industry is not the reason for the reduced level of smelting of the key ingredient for stainless steel production.

“Electricity tariff increases of more than 900% since 2008 have made South Africa’s ferroalloys industry globally uncompetitive and shut unprofitable smelters. The de-industrialisation trajectory is also attributable in part to unaffordable electricity,” said Mthenjane.