Merafe calls for chrome export tax for China
06 February 2013
Posted by: SAIT Technical
By Dineo Faku (Business Report)
Merafe Resources, a ferrochrome producer, is behind the call for a USD 100 per ton tax on exports of chrome ore to China. South Africa has 80 percent of the world reserves of chrome and has been overtaken by China, which has no chrome but produces ferrochrome.The proposed tax was but one of the solutions to the problem. The industry was also hoping for the introduction of quotas as a possible solution.
Merafe Resources, the ferrochrome producer that is behind the call for a $100 (R890) a ton tax on exports of chrome ore to China mainly by platinum producers, is hoping for urgent solutions to curb exports to that country.
The JSE-listed firm expects that its meeting with government officials will find alternatives that will revive the local beneficiation industry.
The government established a task team comprising representatives of platinum, ferrochrome and independent chrome ore producers to address the problem last year.
South Africa has 80 percent of the world reserves of chrome and has been overtaken by China, which has no chrome but produces ferrochrome.
Merafe produces and sells ferrochrome through the Xstrata-Merafe Chrome Venture to stainless steel mills in the US, China, Japan, Taiwan, South Korea and South Africa.
Speaking yesterday on the sidelines of the Investing In Africa Mining Indaba in Cape Town, Zanele Matlala, Merafe's chief executive, said the industry was looking for the reduction of exports to China through a number of means, including possibly export taxes and quotas.
Yesterday, Matlala said the proposed tax was but one of the solutions to the problem. The industry was also hoping for the introduction of quotas as a possible solution.
"When the supply exceeds demand you depress prices, so the end goal is not taxes, but finding a solution that will reduce the exports from South Africa to China mainly from UG2” mines, she said.
The UG2 reef is mined by platinum producers in the Rustenburg area in the North West and is high in chromite.
Matlala said that Eskom's proposed 16 percent electricity price hike was one of the challenges facing producers.
"We are part of the Energy Intensive Users Group and we are lobbying the National Energy Regulator of SA and putting our point across that if prices go up it will have a negative impact on the industry and jobs,” she said.
Last year, the company participated in the Eskom buy-back programme and shut seven out of 20 furnaces. The company would participate in the buy-back programme again and as a result would be temporarily closing five of its 20 furnaces at various plants in the group in this quarter.
"In return, Eskom will buy back the energy not consumed by these furnaces,” it said.
Merafe supplies 16 percent of global ferrochrome needs.
Merafe rose 4.17 percent to 75c on the JSE yesterday