GLENCORE’S South African ferrochrome subsidiary has warned it may abandon negotiations with the government over a discounted electricity package, saying the conditions attached to the offer are unacceptable.
Glencore Ferroalloys CEO Japie Fullard told a Johannesburg mining conference on Thursday that the company could not sign up to the deal as currently structured, according to a report by Reuters. “If they do not come to the party, we are going to walk away from the 62 cents deal,” he said.
Eskom offered South Africa’s two largest ferrochrome producers, including the Glencore unit, steeply reduced tariffs on 27 February, cutting the rate from R1.36 to 0.62 South African cents per kilowatt hour. The proposal requires approval from the country’s energy regulator, and its conditions have not been made public.
Fullard said ferrochrome industry representatives were meeting government officials later on Thursday. Up to 1,500 jobs would be lost if no agreement is reached, he added. Glencore deferred retrenchment procedures at its ferrochrome operations until March 31 to allow talks to continue.
Fellow producer Samancor Chrome, which received the same offer, said it was pressing ahead with lay-offs. It acknowledged the tariff reduction eased electricity cost pressures but said attached conditions threatened the long-term viability of the ferrochrome industry.
South African smelters face electricity costs that have risen tenfold since 2008, compounded by intensifying competition from Chinese producers. Only 11 of a possible 66 smelters remain operational.
