The National Energy Regulator of South Africa (Nersa) is fast-tracking the application by Eskom to reduce the negotiated pricing agreements (NPAs) tariffs applicable to Samancor Chrome and the Glencore-Merafe Chrome Venture in a last-ditch effort to save the country’s ferrochrome industry. The regulator will in the next two weeks hold public hearings to comply with the law, with a decision set to be made in the first quarter of this year. In its application, Eskom asks for a temporary tariff reduction, designed to cover the marginal cost of electricity plus the required subsidies and legacy charges.
The power producer also asked Nersa for expedited processing to allow smelters to commence phased restarts this month. Eskom indicates in its application that the shortfall between the approved NPA tariff and the proposed reduced tariff will be funded by the department of electricity & energy through a dedicated government support process, which Eskom expects to be finalised by March. “Eskom submits that the proposed tariff relief is necessary to prevent full smelter closures and irreversible economic impacts, including large-scale job losses, loss of domestic beneficiation capability and long-term contraction of a strategic mining value chain,” Nersa said in its consultation paper.
The regulator added that electricity represents 35%-40% of ferrochrome production costs, rendering South African smelters less competitive. “Following engagements between industry and government, Eskom has now requested a temporary reduction in the NPA tariff from January 1 2026 to 31 December 2026,” Nersa said. “Government, through the department of electricity & energy, is developing a ring‑fenced support mechanism to fund the tariff difference, ensuring that no additional burden is placed on standard tariff customers.
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“Nersa has been asked to process the application on an expedited basis to facilitate an early operational restart for the affected smelters.” Three years ago, Nersa approved Eskom’s six-year NPAs with six Samancor and four Glencore-Merafe ferrochrome smelter operations in Limpopo, Mpumalanga and the North West. However, both Samancor and Glencore-Merafe last year declared hardship under the take-or-pay provisions of their NPAs. To this end, Eskom in December made a further application requesting a temporary tariff relief for both Samancor and Glencore-Merafe for a period of twelve months.
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