ESKOM will supply South Africa’s ferrochrome industry with heavily discounted power for the next five years under an amended Negotiated Price Agreement (NPA).
The agreement, which sets a tariff of 62c/kWh, potentially saves about 1,500 jobs under risk at the Glencore Merafe Chrome Venture. The NPA, if it meets with all approvals, represents a massive reduction from the previous 87c/kWh NPA.
Critically, Eskom said the agreement was time-bound and tailored to the requirements of each ferrochrome smelter, tacitly excluding energy-intensive users in other sectors.
Said Eskom: “The amended NPA is a medium‑term solution of up to five years and enables a proactive, time‑bound, case‑by‑case approach, allowing Eskom to tailor pricing and contractual structures to the specific commercial circumstances of each smelter, while ensuring transparency, fairness and regulatory alignment for all customers.”
“The ferroalloy and iron and steel segments are experiencing sustained pressure from global commodity markets, rising input costs and structural competitive challenges, and will be prioritised ahead of other smelter industry sectors,” it added.
The prioritisation of the ferrochrome industry lines up with comments made by Minerals Council president Paul Dunne, who in an interview with Miningmx described the ferroalloys sector as “a burning platform”. It had to be saved before the scalability of the agreement could be considered, he said.
He added, however, that other energy-intensive users were likely to seek a similar agreement as all smelters labour under Eskom’s excessive price inflation, up 900% over the last 10 years. It remains to be seen how, or even if, Eskom will accomodate this.
Deal financed, but how?
Eskom also said the agreement “improves Eskom’s liquidity without requiring higher tariffs, additional Eskom borrowing, or further government support”. It did not specify how this was achieved, saying only that the details were commercially confidential ahead of assessment by South Africa’s electricity regulator, Nersa.
Glencore Merafe Chrome Venture said in a statement it had “provisionally” accepted the NPA, adding that a final agreement “remains conditional upon the wider ferrochrome industry agreeing to the final terms and conditions”.
Crucially, it added that it hoped Nersa would treat its approval process with urgency given that jobs were on the line. The venture extended the Section 189 restructuring process at its ferrochrome facilities to May 11.
