Trade, industry & competition minister Parks Tau has thrown a lifeline to the country’s ferrochrome and steel industries that could also save thousands of jobs in the embattled sectors as the government steps up its interventionist efforts to save industries on the verge of collapse due to high energy costs. In a government notice published on Monday evening, Tau amended the 2023 block exemption from certain sections of the Competition Act applicable to qualifying energy users to include industries “in distress” due to persisting “macro-economic challenges”. The ferrochrome industry’s woes arewell-documented, with several smelters already shut down and more on the block.
The steel industry is also on the ropes due largely to high energy costs. Struggling steel producer ArcelorMittal South Africa (Amsa) forked out more than R3.2bn to Eskom for power in its 2024 financial year — more than half of what it paid its almost 9,000-strong workforce The cost of electricity in South Africa has rocketed more than 800% since 2007. It is also damaging the country’s mining industry, which accounts for about 8% of GDP, according to a study by Boston Consulting Group.
The study found that South Africa’s energy costs are the fourth-highest among similar mining jurisdictions. The country’s ability to beneficiate chrome ore into ferrochrome — an indispensable metal in the production of stainless steel — has all but ended, costing the fiscus billions of rand in lost revenue, with thousands of jobs. Read:SA chrome producers seek ‘beneficiation roadmap’ over export tax South Africa has the world’s biggest chrome ore reserves but it has surrendered its competitive advantage to China, which has taken the leading role in the beneficiation process.
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The block exemptions allow energy users to collaborate on securing back-up or alternative energy supplies, and to partner in reducing energy costs and securing adjacent or shared sites, infrastructure and facilities. These will include “joint negotiation and purchase of energy and related product and service supply, including purchase agreements”, the notice states. However, the energy users are not exempt from the prohibition on price fixing for sales of goods or services to customers or consumers, engaging in collusive tendering, or from practising resale price maintenance.
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