ESKOM has agreed to enter into talks for a new electricity tariff that will see South African smelters reopen, on a limited basis, and potentially save more than 3,000 jobs.
Dan Marokane, CEO of the state-owned power utility said on Monday it had signed a memorandum of understanding with the Glencore–Merafe Chrome Venture and Samancor Chrome. This was following constructive meetings on Friday that included Kgosientsho Ramokgopa, energy and electricity minister.
“The MoU creates a structured process to find a sustainable and responsible solution that maintains industrial capacity while protecting broader electricity consumers,” he said.
An announcement is due today from the Merafe-Glencore Chrome Venture which warned last week it was pressing ahead with the closure of its suspended Boshoek Wonderkop smelters affecting thousands of jobs.
The parties have now about three months to agree a new power deal.
An interim tariff adjustment was currently being processed by Nersa, the electricity regulator, enabling the venture to operate, said Eskom. The ferrochrome smelters would be reopened at 40% capacity once the interim tariff adjustment had been finalised.
A team consisting of the two producers, and government representatives develop “an intervention” for competitiveness while “ensuring that electricity-pricing solutions do not impose additional burdens on other customers,” said Eskom.
Glencore Merafe Chrome Venture has ferrochrome capacity of 2.3 million tons (Mt) – equal to a third of South Africa’s annual exports in the mineral.
Electricity costs have increased 900% since 2008, according to the Minerals Council South Africa. Glencore Merafe Chrome Venture has been negotiating for a lowering in the tariff for years in order to save the long-term future of its smelters in South Africa.
It was operating under the six-year, Nersa-approved Negotiated Pricing Agreements approved by the National Energy Regulator of South Africa (NERSA) in October 2023 until earlier this year Merafe-Glencore Chrome Venture and Samancor Chrome activated “hardship clauses” following a decline in metal prices.
In response, Eskom applied for a temporary waiver of take-or-pay obligations for a limited period. “While this helped stabilise operations temporarily, it highlighted the urgency of establishing a more sustainable, long-term solution,” said Eskom.
Glencore alerted the market to the threat of retrenchments on September 1 when it initiatied a Section 189 process in terms of South Africa’s Labour Relations Act.
The Joint Venture had earlier suspended its Boshoek smelter and its Wonderkop operations. This follows the shuttering of 10 other smelters. It also suspended ferrochome production from the Lion Complex facilities, ostensibly to conduct maintenance.
South Africa has lost an estimated 300,000-350,000 jobs due to the closure of 14 energy-intensive smelters across the country. In 2024, the country supplied about 3.3Mt of ferrochrome out of a global production total of 17.5Mt.
