South Africa Chrome Export Controls and Incentives

Can export restrictions and power incentives stop the decline? South Africa bets on chrome ore export controls and tariff deals to protect its struggling ferrochrome industry.

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Key Takeaways From Chrome Industry Update

• Cabinet approves chrome ore export controls to protect domestic smelters

• New electricity incentives through NPAs to reduce power costs

• Ferrochrome production losses prompt multi-department revival plan

• A chrome ore export tax and permit system is being introduced

• Expanded support for special economic zone smelters announced

Cabinet Approves Chrome Ore Export Controls Plan

South Africa's Cabinet has approved new chrome ore export controls and an electricity incentive for the local ferrochrome industry. These decisions aim to counter years of decline in domestic ferrochrome production.

The Department of Electricity and Energy has been tasked with finalizing a government-industry agreement on an electricity tariff realignment. The move follows a Cabinet briefing on the socioeconomic damage caused by plant closures, job losses, and lower production levels in the chrome and ferrochrome sectors.

Ferrochrome Industry Supported With Power Incentive Scheme

Electricity-intensive producers like ferrochrome smelters could soon benefit from discounted tariffs under expanded negotiated pricing agreements (NPAs). These NPAs allow Eskom to cut power supply during peak demand in exchange for lower rates.

A well-known example is the 10-year NPA with South32’s Hillside aluminum smelter. In 2025/26, Eskom is allowed to offer 22,581 GWh under NPAs, climbing to 22,713 GWh by 2027/28. These discounts, though costly, are aimed at preventing the shutdown of key industrial assets.

Power Pricing Strategy To Protect Smelting Jobs Nationwide

According to Meridian Economics (2024), Hillside’s NPA gives a 50% discount, saving about R10-billion annually. But for this to be economically viable, the benefit to South Africa’s economy must exceed R7-billion per year.

This strategy will now be applied to the ferrochrome industry, which has lost over half of its chrome furnaces in the last decade. Eskom’s tariff hikes—12.74% in 2025, 5.36% and 6.19% in the following years—underscore the need for NPAs to keep smelters operating.

Chrome Ore Export Tax and Permit System Planned

Cabinet also confirmed that chrome ore exporters must apply for permits via the International Trade Administration Commission (Itac). A new chrome ore export tax is being drafted. This will discourage raw material exports and promote local ferrochrome production.

The goal is to reduce dependency on international buyers and grow domestic beneficiation. Similar to the scrap metal policy review underway, this initiative aims to restore competitiveness and drive downstream value in South Africa’s mining economy.

Special Economic Zone Smelters To Get More Support

The special economic zone smelters incentives framework will be expanded as part of the support strategy. These zones offer benefits like tax relief, infrastructure access, and regulatory exemptions. By enhancing this framework, the government hopes to revive smelting capacity.

Many smelters located in these zones were shut down due to high electricity costs and global price pressures. With proper backing, they could again become competitive exporters of value-added ferrochrome products.

Ministerial Task Team Develops Smelting Revival Plan

Mineral and Petroleum Resources Minister Gwede Mantashe announced that a task team is working on a revival plan. It includes the departments of Trade, Energy, Transport, and the National Treasury. The task team’s focus areas:

• Fixing rail and port bottlenecks

• Updating power pricing models

• Pushing chrome ore export restrictions

• Creating incentives for beneficiation

• Drafting modern laws to support intervention

These efforts signal a long-term commitment to rebuilding the ferrochrome industry and protecting the national value chain.

Energy Reforms Crucial To Industrial Competitiveness

South Africa’s decision to back NPAs and introduce export taxes reflects a broader energy policy shift. Eskom’s fragile supply situation forces the government to prioritize power use where economic returns are highest.

Ferrochrome smelters employ thousands and add local value. Energy agreements must now prove they deliver higher returns than other users. If managed properly, this new model could stabilize electricity use and industrial output at the same time.

IDC Loan Keeps Steel Production Alive For Now

The Industrial Development Corporation (IDC) recently granted a R1.68-billion interest-free loan to ArcelorMittal South Africa. This saved its Newcastle mill from shutdown, buying six months of time to explore recovery options. The decision followed complaints about the export control system favoring scrap-based producers.

This case underlines the complexity of government intervention—short-term funding alone isn’t enough. Without deeper reforms and fair policies, South Africa risks losing more capacity in strategic sectors.

Outlook Hinges On Execution and Power Stability

South Africa has taken clear steps to stabilize its ferrochrome industry. Export controls, power incentives, and regulatory changes all send a strong signal. But the success of this plan depends on implementation and Eskom’s ability to deliver electricity reliably.

Industrial users need cost certainty and consistent power to remain globally competitive. Without fast-tracked reforms and accountability, this effort could fall short—leaving the sector more vulnerable than ever.

Frequently Asked Questions

1. What are chrome ore export controls in South Africa?

Chrome ore export controls are regulations that require chrome exporters to obtain permits and pay export taxes. These measures are meant to limit the export of raw chrome and promote local beneficiation. The goal is to protect South Africa's ferrochrome industry by making it more competitive against countries that import cheap raw materials. These controls are being implemented through the International Trade Administration Commission (Itac), which will manage the permit system for chrome exports.

2. How do electricity incentives help ferrochrome producers?

Electricity incentives, such as negotiated pricing agreements (NPAs), provide discounted tariffs to power-intensive users like ferrochrome smelters. In exchange, Eskom can interrupt their power supply during peak demand. This lowers operating costs and helps smelters stay in business. The South32 Hillside smelter already benefits from this kind of deal, and the government plans to extend similar incentives to other industrial users. The idea is to balance energy availability with economic returns.

3. Why is ferrochrome production declining in South Africa?

Ferrochrome production has declined due to rising electricity costs, aging infrastructure, and global price competition. Over half of South Africa’s 59 chrome furnaces have shut down. High tariffs make local production expensive, while other countries import South African chrome ore, refine it cheaply, and re-export it. To fix this, the government is introducing export controls, improving logistics, and offering energy pricing deals. A revival plan led by a Ministerial Task Team is underway.

4. What is the special economic zone smelters framework?

The special economic zone (SEZ) smelters framework offers incentives like tax breaks and easier access to infrastructure for businesses operating in designated areas. These zones aim to attract investment, create jobs, and promote local manufacturing. The government plans to expand SEZ support to help revive ferrochrome production, especially in areas hit hardest by closures. With added incentives, smelters in these zones could restart operations and regain global competitiveness.

5. What impact will the chrome ore export tax have?

The chrome ore export tax is expected to discourage raw material exports and promote domestic processing into ferrochrome. It will raise the cost of exporting unbeneficiated chrome, pushing producers to invest in local smelters. This supports jobs, increases value-added exports, and stabilizes the industry. While some exporters may resist, the long-term goal is to make South Africa a leading ferrochrome supplier by processing more chrome at home rather than selling it raw.