South Africa's ferrochrome sector and smelting industry have been shrinking as power prices have ballooned by 900%.
Eskom has finalised a Memorandum of Understanding with ferrochrome producers, which is expected to prevent the loss of thousands of jobs in the ferrochrome sector.
The parastatal confirmed it had finalised the MoU with Samancor Chrome and the Glencore–Merafe Chrome Venture, following discussions held on Friday with the Minister of Electricity and Energy, Kgosientsho Ramokgopa, and organised labour.
Tariff adjustment
Critically, the National Energy Regulator of South Africa (Nersa) is currently processing an application for an interim tariff adjustment for the smelters.
Once the interim tariff is approved, the smelters have committed to suspend the Section 189 retrenchment process and bring about 40% of their furnace capacity back online while the long-term solution is developed under the MoU.
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Industry shrinking
South Africa’s ferrochrome sector and smelting industry have been shrinking amid a 900% spike in power prices over the past few years.
According to Ramokgopa, this resulted in the closure of 14 smelters and some 350 000 job losses.
MoU
Eskom said the MoU formalises a joint commitment to “develop a sustainable, long-term intervention for the ferrochrome sector”, which has been severely affected by global market pressures and rising production costs.
“The MoU establishes a joint multi-stakeholder task team comprising Eskom, the two producers, and government representatives.
“The team will prioritise developing an intervention that supports industrial competitiveness while ensuring that electricity-pricing solutions do not impose additional burdens on other customers. The parties have agreed to present a proposed solution within three months,” Eskom said.
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‘Safeguarding households’
Eskom spokesperson Daphne Mokwena said the utility remains committed to supporting industrial operations within a lawful and economically sustainable framework that balances the needs of industry with the rights of all customers.
“Safeguarding households and small businesses from unintended cost impacts remains central to Eskom’s mandate.”
Collaboration
Eskom Group Chief Executive, Dan Marokane, welcomed the collaborative efforts of government, labour, and industry.
“The MoU creates a structured process to find a sustainable and responsible solution that maintains industrial capacity while protecting broader electricity consumers.”
Price agreements
Samancor Chrome and Glencore–Merafe currently operate under Negotiated Pricing Agreements (NPAs) approved by the Nersa in October 2023.
These six-year agreements, which took effect earlier this year, fall under the Interim Long-Term Framework issued by the then Department of Mineral Resources and Energy in 2020.
The framework provides qualifying energy-intensive industries with access to more globally competitive tariff structures that support production, protect jobs, and maintain South Africa’s industrial capacity.
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