South Africa's beneficiation strategy and the proposed chrome ore export tax: the relevance towards economic development

Abstract

This study aimed to investigate the efficiency and relevance of the beneficiation approach as well as to examine the potential impact of the proposed chrome ore tax. A qualitative research approach was used in this study. Data was gathered from secondary sources and interviews with industry experts were undertaken to fulfil the purpose of the study. Purposive sampling was used to select the participating organisation. The study population comprised experts in the chrome ore and ferrochrome industries in the eastern bushveld complex and within the South African mining sector.

The assumption of the benefit of the chrome ore export tax is based on South Africa's chrome ore reserves, production, and export of chrome ore. The proposed chrome ore export tax is intended to help South Africa's ferrochrome industry. China is the primary importer of South African chrome ore, as well as the largest ferrochrome producer. South Africa is the leading ferrochrome exporter. The primary driver of South African ferrochrome’ s lack of competitiveness has been rising electricity costs and supply. The responses of the experts from the interviews were also presented and organized into themes and sub-themes. The themes included: inputs of production and investment in infrastructure; FDI and investment in infrastructure; developing beneficiation abilities; cost and supply of electricity; close down of operations and displacement; cost and supply of electricity and lack of competitiveness; displaced by international competitors; displaced by international competitors and job losses; poor economic development; close down of operations and price manipulation; and investment in infrastructure and improved relationship with the mining community.

The findings show that the government's proposed export tax is not feasible in view of the country's challenges. It was revealed that the proposed export tax will raise the cost of production for the chrome ore producers, which will lead to displacement by foreign chrome ore producers and the loss of employment in the country. The government must establish an enabling climate for the industry to perform efficiently. As a result, the government must spend on infrastructure like roads, railways, and ports. The study recommended that the goal is to establish a favourable energy price strategy that would increase the international competitiveness of South Africa's downstream ferrochrome businesses. The study also suggested that, despite the South African government's investments in renewable energy and gas resources, coal should not be abandoned, but rather modern technology should be employed to help minimize coal emissions, given that South Africa is rich in coal.