Ferrochrome producer Glencore-Merafe has been offered 62c per kWh – less than half what it was paying in 2025. From Moneyweb.
South Africa’s shrinking ferrochrome sector may get the electricity tariff it has been asking for – 62c per kilowatt hour (kWh), which it says is needed for many smelters just to break even.
Last week, government and Eskom offered to reduce the electricity tariff for the Glencore-Merafe joint venture to 62c, a sharp reduction from the 87c/kWh previously negotiated.
This is the latest discount negotiated with the group, effectively halving the tariff it was paying a year ago.
The terms, conditions and contractual framework of the tariff must still be agreed by the National Energy Regulator of SA (Nersa). Glencore-Merafe says it will in the meantime extend the Section 189 retrenchment process by a month to 31 March 2026.
Read:
Nersa approves interim tariff discount for Glencore-Merafe and Samancor smelters
Nersa members perplexed by Eskom application for smelter tariffs
However, if agreement cannot be reached on the terms and conditions of the new tariff, the company says it will have no option but to continue its retrenchment programme under Section 189 of the Labour Relations Act.
At a media briefing on Friday, Electricity Minister Kgosientsho Ramokgopa called this the biggest, single announcement of his tenure, one that would protect jobs, boost exports by R76 billion, and add nearly R18 billion in revenue to Eskom.
It will also bring in a further R5.5 billion in tax.
The reduced tariff is a reprieve for SA’s collapsing ferrochrome smelters, with just 11 of 66 currently operational.
It will allow Glencore-Merafe to fire up its three smelters, with the Lion smelter already partially back online as of February 2026.
The same offer will be extended to Samancor Chrome’s 22 furnaces. Samancor and Glencore-Merafe are the two largest producers in the country.
SA has the capacity to produce 4.8 million tonnes per annum (Mtpa) but is currently producing less than half that level and could slip to just one Mtpa in 2026 without government intervention of the kind just announced.
Read:
Samancor Chrome set to cut 2 500 jobs, union says
Glencore-Merafe retrenchments are another casualty of Eskom
Pressure mounts on Eskom pricing as more retrenchments loom
Ramokgopa said the reduced tariff will be extended to other smelter operators and could bring 45 furnaces back online by the end of the year, with the number growing to 49 by December 2027.
This represents a massive turnaround from the current 11.
The smelters operate under negotiated pricing agreements (NPAs) with Eskom, before temporary relief measures kicked in to avert further closures.
They activated hardship provisions within these NPAs due to escalating costs and uncompetitive market conditions, prompting the recent negotiations.
The standard Eskom industrial tariffs, without NPAs, were about 195.95c/kWh. These were heavily discounted for energy-intensive users but still proved unsustainable.
Arresting SA’s deindustrialisation
Government appears determined to arrest the deindustrialisation of SA, brought on largely by a 900% increase in electricity tariffs since 2008.
This surge brought ArcelorMittal SA (Amsa) to its knees, forcing it to place its Newcastle long steel plant under care and maintenance.
Read:
Can South Africa survive without Amsa?
ArcelorMittal, IDC end exclusive talks with no deal
The company is currently in discussions with the Industrial Development Corporation and the government to find a solution. Massive increases in electricity tariffs and rising Transnet freight charges are blamed for the sharp deterioration in Amsa’s financial position.
SA holds about 80% of the world’s known chrome reserves but has relinquished its position as the world’s top ferrochrome producer to China, mainly due to soaring electricity costs, which can account for up to 40% of production expenses.
Listen/read:
Energy costs, not exports, threaten SA’s chrome industry
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Interim smelter plan to cost government R5.2bn
Rather than beneficiating chrome ore into higher-value ferrochrome for stainless steel production, unaffordable electricity has forced SA to export raw chrome ore – primarily to China.
China now accounts for 58% of global ferrochrome output, though SA hopes to recover some of its lost glory through the newly announced 62c/kWh electricity tariff.
