MERAFE Resources said it planned to retrench staff at its Wonderkop and Boshoek ferrochrome smelters on December 8 after Eskom’s proposal for an improved electricity tariff failed to meet expectations.
Merafe, listed on the JSE, is a 20.5% shareholder in Glencore Merafe Chrome Venture which 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.
A new tariff proposal was presented by Eskom to the venture on November 28. “While the proposal remains subject to further approval processes, the Venture’s analysis thereof indicates that the proposal only supports the continued operation of the Lion smelter,” said Merafe in a statement.
In the absence of a further improvement in the tariff package from Eskom, the two smelter complexes would be put on care and maintenance by January 1, Merafe said. “The company remains committed to engaging with all stakeholders throughout this process and maintain operational sustainability where possible,” it said.
According to Solidarity, a union, some 2,425 direct jobs and more than 17,000 indirect jobs will be affected.
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.
On Monday, South Africa’s chrome ore producers and ferrochrome smelters rejected proposals for a Government-backed chrome ore export tax. They argued globally competitive electricity tariffs represent the only viable solution to restarting idled facilities.
The Ferro Alloy Producers Association, representing primary miners, platinum group metals operations generating chrome ore and integrated producers, said the industry remains united in safeguarding the ferrochrome sector whilst adding value to the country’s mineral resources.
They said chrome ore pricing and availability had not caused smelter closures or suspensions. Rather, electricity tariffs had rendered domestic facilities uncompetitive and unprofitable.
