Maximising South Africa’s platinum group metals (PGMs) endowment through the development of a national platinum strategy is key and Minerals Council South Africa must take a bow for publishing its 14-page PGMs roadmap.
Now it should do the same thing for South Africa’s chrome ore endowment in the interests of job creation and sustainability.
South Africa’s mature chrome value chain, which provides tens of thousands of jobs and contributes tens of billions of rands to the gross domestic product (GDP) of the country, has been forced to hand over jobs and ferrochrome market share to China because of the shortage and high cost of Eskom power.
Now, every effort should be made to win back jobs and regain market share by using renewable energy to rebuild South Africa’s minerals energy complex.
Just as has been proposed for PGMs, chrome needs a national roadmap and a champion to promote its cause.
The growing trend of exporting raw chrome ore to China, which turns it into value-added ferrochrome and then stainless steel, must be reversed, and more of it should be used to produce ferrochrome, a market South Africa led until Eskom sabotaged its growth.
With upper group two chrome ore obtained through PGMs mining, South Africa has 82% of world chrome resources, which puts it into a position of strength similar to what it has in PGMs.
Historically, 100% of metallurgical-grade chrome ore was beneficiated locally and South Africa was the world’s foremost producer of chrome ore and ferrochrome, with an installed capacity of 4.8-million tonnes of ferrochrome production a year.
But, as chrome and ferrochrome company Merafe pointed out last week, the once-dominant South Africa produced only 29% of global ferrochrome and sent 2% more chrome ore to China totalling 14.3-million tonnes. China, by contrast, produced 40% of global ferrochrome, 8.2% more than the previous year.
That is a blow to South Africa at this time, because ferrochrome contributes 400% more to GDP than chrome ore and creates 200% more jobs. It represented optimum beneficiation and needs to be brought back by the country going hammer and tongs into low-cost renewable-energy generation. The country has superior sun and the prime wind to make that possible, as economists have rightly pointed out to President Cyril Ramaphosa.
Global ferrochrome demand is increasing, along with stainless steel demand, and South Africa’s beneficiation strategy in chrome is fully justified in that it represents a very sound business case.
South Africa’s producers need to lock arms and government needs to provide the necessary encouragement for the benefit of the South African people. We are again talking about getting the best out of a national patrimony that belongs to all citizens.
While Eskom gets its house in order, government should impose a temporary tariff on the export of raw chrome ore from South Africa and ringfence the revenue from that tariff for socioeconomic development.