Could South Africa be considering an export tax on ore? Why?

The idea of a export tax on South African chrome ore is again making the rounds after going nowhere a few years ago. While the fully integrated miners, most notably Glencore and its lap dog Merafe, were the principals behind the previous attempt, and it failed one for a couple of very important reasons. None of the South African ferrochrome producers are owned by South Africans except Merafe which owns a 20.5% share in Glencore’s chrome operations.

On the other hand, many of the miners are South Africans who depend on ore exports to live and anything that is disruptive to their export sales will be opposed.

There is also the question of whether the export tax will be implemented to raise revenue for the government and God knows the South African government is broke. If that is the case, the export tax wouldn’t have to be high.

However if it is too high, the South African miners would lose the export market and be forced to sell to the domestic, e.g. foreign, South African smelters at non competitive prices. A no brainer as Zimbabwe discovered.

Finally, any export tax on ore from South Africans will raise all export prices for all supplies. However, in the case of South Africa, the money will go to the government while other miners will pocket the money while increasing output.

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I guess now the question is 30% or 20%. Not about, would it be done? When Michelle Taylor, Tharisa COO, said last November in the ICDA conference in Johannesburg, “South Africa is, without doubt, an irreplaceable producer of chrome ore globally”, it reflects how even a Chrome Ore producer would look at an Export Tax. Now, the issue is that of the Department of Trade and Industry with the new Industrial Policy Action Plan (IPAP 2018/19-2020) and not about any Smelter. For far too long the narrow stance of an Export Tax dislocating the Chrome mining and affecting 17500 jobs… Read more »
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