The manganese smelter says it cannot sustain operations due to high electricity costs, which make it uncompetitive internationally. Picture: Supplied The pressure is mounting on Eskom to ensure the proposed discount deal with smelters work, after Transalloys, a manganese smelter situated in eMalahleni in Mpumalanga, announced on 29 December that it had issued a section 189 notice, potentially putting 600 direct jobs at risk. A further estimated 7 000 livelihoods linked to the smelter and the broader eMalahleni economy via its supply chain and various dependencies could also be impacted, should the company not secure the required relief regarding its energy costs.
This comes as the clock is ticking on a proposed deal that would allow Eskom to buy excess coal from local producers at lower prices to feed its older, under-utilised coal-fired power stations to generate cheaper electricity. This electricity would then be ring-fenced for ferrochrome smelters, to save up to 300 000 jobs in the wider smelting industry and kickstart re-industrialisation in the country. Eskom announced a Memorandum of Understanding (MoU) with Samancor Chrome and the Glencore-Merafe Chrome Venture on 8 December to implement a long-term intervention before the end of February.
This allowed Glencore to delay its own Section 189 process, which would otherwise have resulted in the loss of 2 500 jobs. In terms of the MoU, the two companies will pay 87.7c/kWh until the end of February, when they expect the price to drop to 62c/kWh. Currently, the companies are paying closer to 135c/kWh under the negotiated pricing agreements (NPAs) with Eskom.
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This is already a big discount, provided within a policy framework designed to assist energy-intensive users under certain strict conditions. Electricity and Energy Minister Kgosientsho Ramokgopa disclosed earlier in December that government will subsidise the energy costs for the period until the end of February to the tune of R5.2 billion. It is not clear where the funds will come from. Transalloys is also currently operating under an NPA, approved by the energy regulator Nersa earlier this year, but, as is the case with other smelters, the electricity cost is still killing it.
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