AFTER months of uncertainty, the threat of job losses has been lifted from employees at the ferrochrome smelters of Glencore Merafe Chrome Venture.
This was after South Africa’s energy regulator Nersa approved a cut price electricity tariff for the country’s ferrochrome industry, a step which helps preserve jobs and raises the prospect operators can reopen currently mothballed production in the future.
Glencore announced on Friday that Nersa had approved a 62c/kWh tariff for the South African ferrochrome industry – a massive reduction from the previous 87c/kWh NPA.
For the Glencore Merafe Chrome Venture, the agreement saves about 1,500 jobs. It also provides a lifeline to ferrochrome operations run by Samancor, owned by Anglo American and South32.
“This approval represents a significant milestone and an important step towards stabilising operations and supporting a more sustainable future for the Venture’s smelting business,” said Glencore in a statement.
“In parallel, and in line with this progress, the Venture confirms that the Section 189 process has been lifted, marking a further step towards stabilising operations and progressing the phased restart of the business,” said Glencore Merafe Chrome Venture.
The venture added that discussions to finalise the terms and conditions of the lower tariff – the Negotiated Pricing Agreement – were continuing with Eskom. “These terms remain critical in determining the commercial viability and long-term sustainability of the tariff solution,” said Glencore.
Assuming the fine print is agreed with Eskom, the lower tariff is merely the first step in stabilising and, potentially, growing ferrochrome production in South Africa. Head of Glencore’s ferroalloys division in South Africa, Japie Fullard, has previously addressed the importance of innovatively attracting finance to the sector.
Electricity costs have increased tenfold since 2008 which makes the South African production uncompetitive against operators in China. Only 11 of a possible 66 smelters remain operational, according to reports.
