SOARING electricity costs are decimating South Africa’s ferrochrome industry, forcing widespread furnace closures and threatening global stainless steel supply chains, said Bloomberg News in an article on Monday.
Mining giants Glencore and Samancor Chrome have shuttered most operations, with none of Glencore’s 22 furnaces currently running and only three of Samancor’s 24 facilities remaining active.
“Electricity is our big problem,” Glencore Alloys CEO Japie Fullard said. “In the absence of a solution, South Africa is going to bleed.”
Power costs have rocketed eight-fold since 2008, with electricity tariffs now 50% higher than China’s and representing up to 60% of production expenses, said Bloomberg News. The energy-hungry smelters consume roughly 7% of state utility Eskom’s total output.
The crisis has already eliminated 2,000 direct jobs over two years, with the industry’s economic contribution falling 16% to R62bn. Glencore faces potential redundancies affecting 2,500 more workers, said bloomberg.
“This is not a threat, this is the reality,” Fullard added.
The shutdowns are reshaping global supply chains, with South Africa now exporting over 80% of its chrome ore to Chinese smelters rather than processing domestically. This shift could impact the United States, which relies on South Africa as its largest chrome supplier for critical applications including jet engine components.
Whilst South Africa’s government approved support measures in June, including revised electricity tariffs and chrome ore export controls, implementation details remain unclear.
“There are plans on the table from government, but there’s no timeframe,” said FAPA chairperson Nellis Bester. “And we are running out of time.”
