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|New Move In South Africa On Cr Ore Export Restriction|
|= NUM suggests review of China's role in SA economy =|
A new move is seen in South Africa regarding export restriction of chrome ore which has been long in dispute. NUM (The National Union of Mineworkers), a union having strong influence over the country's policy-making and economy, now synchronizes on the issue with ferrochrome producers and appeals to the government to review legislation.|
It was long ago when there arose opinions that chrome ore export from South Africa disturbed ferrochrome market and unnecessarily softened the price.
So far, however, the government has been reluctant to restrict ore export. At the same time it has been a public concern what kind of action would be taken by the mineworkers, i.e. NUM. Last week the union made its standpoint clear and requested the government to review the restriction issue.
More precisely, NUM said that China's investment in South Africa needed to be viewed with caution, the union commented in the its National Executive Committee held last week.
According to export statistics of South Africa, chrome ore export from SA to China amounted to 2.647 million tons during the seven-month period (January - July) in 2011 (80% of SA's Cr ore export during the period) , up by 40.3%, big growth, from the same period in 2010 (1.887 million tons = 72% of SA's Cr ore export during the period). This growth certainly helps SA to uphold economy to a certain extent, but on the other hand gives a boomerang effect to SA's ferrochrome industry, resulting in weaker prices and loss of ferrochrome market shares.
Boomerang effect in this case means (i) excessively high stocks of imported chrome ore at Chinese ports, about 3.1 million tons (6.5 month import equivalent), most of which are not earmarked, have made the ore's international price weaker, (ii) One of the reasons of the unlively ferrochrome's international price is that the cheap ferrochrome, produced in China using the low-priced chrome ore from South Africa, are preferred among the Chinese domestic consumers. Now it is becoming known that these are giving seriously bad effects over SA's ferrochrome industry.
SA government has been trying to legislate restrictive measures on the chrome ore exports by a new "beneficiation law", in which mandatory value-adding is required, but there has been very little progress. In fact, Merafe, one of the major South African ferrochrome producers has decided to voluntarily refrain from exporting the raw ore, but some other smelters still find it difficult to discontinue the more profitable ore export business than ferrochrome export of which production cost has been fast increasing.
Although the new beneficiation law will serve certainly good for SA's ferrochrome industry on its part, there will be a high barrier to overcome. Value-adding to the chrome ore, i.e. ferrochrome production, inevitably requires a solution to cope with potentially bigger need for power which is not and will not be abundantly available in the country.
|last modified : Tue 04 Oct, 2011 [10:48]|