GLENCORE CEO Gary Nagle said he was confident Eskom will grant the group a 54% electricity tariff reduction before the end of February, a development that would enable the group to restart ferrochrome production.
“We sit here confident that we will get a very competitive tariff from the government,” said Business Day citing comments made by Nagle at Glencore’s annual results presentation. Meetings with the South African Presidency and key ministers, including Dan Marokane, the CEO of Eskom had been encouraging.
The comments come ahead of a February 28 deadline for Eskom and Glencore to agree on a workable energy solution for its Lion, Boshoek and Wonderkop smelters, said Business Day.
Last month, the National Energy Regulator of South Africa granted the facilities an interim tariff of 87.74c per kilowatt hour — 35% below the previous rate — which was sufficient to resume operations at Lion but falls short of the 62c tariff Glencore says all three smelters require to be commercially viable long-term.
Glencore Alloys CEO Japie Fullard said tariff relief was only a starting point, with the group committed to broader cost and technology improvements to remain globally competitive.
The stakes are considerable. Eskom’s electricity prices have risen more than 900% since 2008, forcing more than half of South Africa’s 59 chrome furnaces to shut.
The country holds roughly 80% of the world’s known chrome reserves but has steadily ceded the ferrochrome smelting business to China, where power costs are more than 50% cheaper, said Business Day.
