SOUTH Africa’s electricity minister on Friday unveiled a heavily discounted power tariff for the country’s beleaguered ferrochrome industry in what he is quoted to have said was the “single most important announcement of his tenure”.
Citing Kgosientsho Ramokgopa, News24 said ferrochrome smelters would receive electricity at 62c/kWh. It is a cut-price rate that he intends to extend to all smelters in the country through a phased approach, using power pricing as a “catalyst for growth”, said News24. The intervention would create jobs and drive economic growth.
Only 11 of South Africa’s 66 smelter furnaces are currently operational, the publication said. Ramokgopa said the tariff would bring 45 furnaces back into production by December, with a further four expected online by end-2027.
The measure is projected to support more than 11,400 direct jobs and over 100,200 indirect positions, generate R76bn in export earnings and deliver R17.9bn in additional revenue to Eskom, said News24. The fiscus would benefit by around R5.5bn, he added.
Eskom CEO Dan Marokane said the two main ferrochrome smelter operators, Glencore and Samancor Chrome, had yet to formally accept the proposal, as conditions relating to tariff duration, minimum take-or-pay levels and risk-sharing remained under negotiation.
The tariff also requires approval from the National Energy Regulator of South Africa before it can take effect, making it a priority to finalise terms so that a regulatory application can be submitted without delay, said News24.
Eskom chairperson Mteto Nyati said South Africa’s beneficiation ambitions would remain hollow without affordable electricity, and that the utility’s own cost pressures had compelled it to act. The costs of the intervention would be absorbed within the debt relief package extended to Eskom by National Treasury, with Marokane insisting other power consumers would not bear the burden.
South Africa’s smelting sector has contracted sharply as electricity prices surged by 900% in recent years. Last year the industry warned that virtually all remaining smelters faced imminent closure, threatening 300,000 jobs. Glencore has repeatedly cautioned that retrenchment notices for its Wonderkop and Boshoek smelters would become binding on 28 February if the 62c/kWh rate could not be confirmed.
