Dec. 2, 2025 - South Africa’s chrome mining sector has pushed back against government plans to impose a tax on chrome ore exports, arguing that the decline of the domestic ferrochrome industry is the result of crippling electricity tariffs rather than ore availability or pricing.

Merafe Resources confirmed on Tuesday that its joint venture with Glencore has launched formal layoffs, citing failed power tariff negotiations that leave two key smelters unviable. The Glencore-Merafe JV will place its Boshoek and Wonderkop smelters under care and maintenance from January 1, 2026, unless a government solution emerges by December 8. Only the Lion smelter can continue operations under the new power tariffs proposed by state utility Eskom on November 28, Merafe said in a statement. Retrenchments will become binding from December 9 if no breakthrough is reached.

The crisis extends beyond the JV. Samancor Chrome, another major player, plans to cut 2,496 jobs next year across its headquarters and 8 production sites, warning that sky-high electricity costs have made the industry "untenable."

South Africa holds 80% of the world’s chrome reserves but has lost its status as the top ferrochrome producer to China since 2012, largely due to a 900% surge in electricity tariffs since 2008, according to a joint statement by the Minerals Council South Africa and the Ferro Alloy Producers Association on Monday.

The government’s October policy to impose a 25% export tax on unprocessed chrome ore - aimed at boosting domestic smelting - has drawn fierce opposition. The Minerals Council calls the tax "misplaced," noting it has cut chrome exports by 42% in its first month without offsetting smelters’ cost burdens. Industry leaders argue that globally competitive power prices, not trade restrictions, are the key to reviving the sector and mitigating EU’s Carbon Border Adjustment Mechanism (CBAM) risks.

While ferrochrome producers are pushing for renewable energy adoption as a long-term fix, short-term solutions remain elusive. The Minerals Council is in urgent talks with authorities to balance beneficiation goals and job protection, but progress has been slow. Analysts warn that without tariff relief, South Africa risks reverting to over-reliance on raw chrome exports, failing to turn its resource advantage into economic gains.