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30 Mar 12 Impose $100/t raw chrome duty soonest, Ruukki urges

JOHANNESBURG ( – South African ferrochrome aspirant Ruukki has urged the South African government to impose a $100/t duty on the export of raw chrome from South Africa with the utmost urgency.

Speaking at an industry conference in Hong Kong, Ruukki enterprise director Dr Danko Konchar called for industry consolidation to protect jobs and maximise South Africa’s chrome resource endowment.

Ruukki currently exports raw chrome directly to China and sells a diverse range of chrome products internantionally into the the stanles steel and steel sectors.

His plea follows years of requests to government to halt the South African ferrochrome industry’s demise in the face of rising Chinese production from raw South Africa chrome ore.

Konchar told the conference that the fundamental challenge for South Africa was to create a competitive ferrochrome industry capable of protecting, sustaining and creating jobs while growing its global market share.

In the past year both of these objectives have come under threat. The South African ferrochrome industry currently employs more than 200 000 people and contributes R42-billion to South Africa’s gross domestic product (GDP).

South Africa’s share of the global ferrochrome market has fallen from 50% to 42% between 2001 and 2010 and the worrying trend was set to continue unless urgent action was taken to prevent a predicted fall to 36%.

While that was under way, China’s market share had grown from 5% to 25% and was forecast to increase further.

The curbing of unbeneficiated chrome ore exports to China was critical to reversing the decline in South Africa’s global market share and jobs.

Ruukki supported the current industry initiative that sought to form a partnership between government and chrome producers to find long-term sustainable interventions.

Konchar urged the $100 duty imposition “as soon as possible” in order to encourage more beneficiation of chrome ore within South Africa, thereby boosting domestic ferrochrome production and yielding additional significant socioeconomic benefits for the country.

Similar duty regimes had been very successful in India and Kazakhstan and it was vital that the industry and government start a working group immediately.

Another initiative that requires closer investigation was the possible establishment of a sales and marketing company to regulate the export of chrome ore, which had been successful in other markets, such as the oil industry.

Export quotas could be directly beneficiation linked.

Alongside these two initiatives, Ruukki believed industry consolidation was also necessary.

Without intervention, the industry forecasts job losses of up to 80 000 and a GDP plunge to R23-billion.

On the environmental protection front, global carbon dioxide (CO2) emissions from production would rise by at least 15% a ton as a result of the displacement of capacity from the world’s most efficient South African smelters to the world’s least efficient, energy-sapping and CO2-spewing Chinese smelters.

While the export of raw ore creates only 5.7 South African jobs per 1 000 t of ore, the export of ferrochrome creates 17.3 jobs per 1 000 t of ferrochrome – over three times more.

There is a nigh six times value uplift with ore exports contributing R1 660/t to GDP and ferrochrome contributing R9 109/t to GDP.

These figures justify South Africa’s beneficiation strategy, which should be accompanied, the industry believes, by the laying down of a justifiable electricity price path that keeps State utility Eskom in business and also sharpens competitiveness.

South Africa would not be alone in implementing measures to maximise return from the resources it hosts in abundance, given what Canada has done in potash, Brazil in iron-ore, China in metallurgical coke and India in both chrome and iron-ore.

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