Merafe Resources Limited said that South Africa should consider export duties and other controls to stop a surge in chrome ore sales to China so local ferrochrome makers can stay competitive.

Mr Stuart Elliot CEO of Merafe Resources said that South African producers of ferrochrome, made from chrome ore, have hired independent consultants to investigate the industry, and a report with proposals to control exports will be submitted to the government by the end of September 2011.

According to estimates by Germany based market research company Heinz H Pariser, Chinese ferrochrome output rose by 12% to 1.2 million tonnes in the year to June 2011 as compared with 0.1% growth to 1.85 million tonnes in South Africa. Local makers of ferrochrome, used in stainless steel production, don't want to have to compete against Chinese buyers for chrome ore.

Mr Elliot said that "The industry is struggling." He added that royalty taxes, rising electricity costs and a proposed carbon tax will make South Africa extremely expensive in the medium term and will damage the industry and lead to job losses.

According to Heinz Pariser, South African exports of chrome ore to China have risen 19% since 2008 and totaled 3.1 million tonnes in 2010 or nearly 36% of total Chinese imports. South African exports for the year to date totaled 2 million tonnes, nearly half of total Chinese imports.

Mr Elliot said that the increase in South African chrome ore exports is attributed to rising sales by platinum producers, which mine chrome ore as a byproduct and increasing ferrochrome production capacity in China.

(Sourced from www.bloomberg.net)