Eskom signs deal aimed at saving SA’s shrinking smelter sector

Electricity tariffs for the sector have increased by roughly 900% since 2008, leading to closures and retrenchments. Picture: iStock Eskom has signed a memorandum of understanding (MoU) with Samancor Chrome and the Glencore-Merafe Chrome Venture – South Africa’s two largest ferrochrome producers – in a bid to halt a wave of retrenchments and smelter closures that have decimated a sector facing 900% electricity tariff increases since 2008. The National Energy Regulator of SA (Nersa) is currently processing an application for an interim tariff adjustment which, once approved, will suspend retrenchments and return 40% of smelter capacity back online.

In parallel, government is working on a complementary mechanism to support a more competitive pricing pathway for the sector, expected to be finalised over the next three months. The announcement from Eskom follows consultations with Minister of Electricity and Energy Kgosientsho Ramokgopa and organised labour. “The MoU formalises a joint commitment to develop a sustainable, long-term intervention for the ferrochrome sector, which has been severely affected by global market pressures and rising production costs,” Eskom said in a statement on Monday.

Eskom group CEO Dan Marokane added: “Eskom welcomes the collaborative efforts of government, labour, and industry. The MoU creates a structured process to find a sustainable and responsible solution that maintains industrial capacity while protecting broader electricity consumers.” Glencore-Merafe, responsible for roughly a third of SA’s chrome output, said it would extend the deadline for Section 189 consultations – required under the Labour Relations Act where retrenchments are involved – until the end of February 2026. “This extension demonstrates the venture’s commitment to engaging constructively with government and other stakeholders to find a viable solution that can save jobs and support competitive beneficiation in SA,” said Glencore-Merafe, adding that this would not impact its own internal streamlining and efficiency programme called Project Phoenix. Samancor Chromeand Glencore-Merafe currently operate under negotiated pricing agreements (NPAs) approved by Nersa in October 2023.