The National Energy Regulator of South Africa (Nersa) has granted South Africa’s ferrochrome majors, Samancor and Glencore-Merafe Chrome Venture, a hefty 35% electricity relief in a desperate measure to save the country’s smelters and thousands of jobs. The decision follows an application by Eskom in December for temporary electricity price relief for the negotiated pricing agreements (NPAs), entered into with the two companies, initially penned in 2023. The relief period is set to last until the end of this year, with the government set to foot the bill for the relief, something that the National Treasury might weigh in on in the budget speech next month.
Nersa told the special extended electricity subcommittee on Thursday that the relief to the two companies will save more than 24,000 jobs across the value chain. Nersa’s Willibrod Majola said South African smelters face a near-death experience if they do not get financial relief in the form of tariff relief. “We are requesting an electricity price relief of 87.7c per kilowatt hour [from the R1.36c contained in the 2023 NPA].
This is subject to the approval of the government funding mechanism,” Majola said. “This funding mechanism will ensure that the shortfall between the approved NPA and the temporary electricity relief is not recovered through the regulatory clearance account.” The smelters had applied for 62c per kilowatt hour. Glencore-Merafein December gave the government one week to offer it more competitive electricity tariffs before it pulls the trigger on 2,500 retrenchments and the idling of two smelters in early 2026.
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Samancor Chrome and Glencore-Merafe are major producers of ferrochrome in South Africa, operating multiple smelters and chrome ore mines. “From the time we had the NPA approved in 2023, our condition of the approval was that Eskom would every six months present a report to the regulator on how this approved NPA is actually supporting jobs. “We are aware that there are in excess of 4,000 jobs that are directly impacted by this NPA and more than 20,000 jobs that are indirectly impacted. It is this same number that we are in support of in this current application, so that we will be preserving going forward.
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