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Eskom has signed a memorandum of understanding (MoU) with Samancor Chrome and the Glencore-Merafe Chrome Venture \u2013 South Africa\u2019s two largest ferrochrome producers \u2013 in a bid to halt a wave of retrenchments and smelter closures that have decimated a sector facing 900% electricity tariff increases since 2008.<\/p>\n
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.<\/p>\n
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.<\/p>\n
Read:
Glencore-Merafe retrenchments are another casualty of Eskom
Nersa makes big progress towards competitive electricity market
Key ferrochrome bastion buckles under SA energy costs<\/p>\n
The announcement from Eskom follows consultations with Minister\u00a0of\u00a0Electricity and Energy Kgosientsho Ramokgopa and organised labour.<\/p>\n
\u201cThe 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,\u201d Eskom said in a statement on Monday.<\/p>\n
Eskom group CEO Dan Marokane added:\u00a0\u201cEskom 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.\u201d<\/p>\n
Listen\/read:
Energy costs, not exports, threaten SA\u2019s chrome industry
Industrial alarm as Samancor warns of mass ferrochrome retrenchments<\/p>\n
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Glencore-Merafe, responsible for roughly a third of SA\u2019s chrome output, said it would extend the deadline for Section 189 consultations \u2013 required under the Labour Relations Act where retrenchments are involved \u2013 until the end of February 2026.<\/p>\n
\u201cThis extension demonstrates the venture\u2019s commitment to engaging constructively with government and other stakeholders to find a viable solution that can save jobs and support competitive beneficiation in SA,\u201d said Glencore-Merafe, adding that this would not impact its own internal streamlining and efficiency programme called Project Phoenix.<\/p>\n
Glencore and Merafe Resources share prices<\/strong><\/p>\n Samancor Chrome and Glencore-Merafe currently operate under negotiated pricing agreements (NPAs) approved by Nersa in October 2023.<\/p>\n These six-year agreements, which took effect earlier this year, fall under the Interim Long-Term Framework issued by the then Department of Mineral Resources and Energy in 2020.<\/p>\n The framework provides qualifying energy-intensive industries with access to more globally competitive tariff structures, aimed at supporting production, protecting jobs and maintaining South Africa\u2019s industrial capacity.<\/p>\n Earlier this year, both smelters activated the \u201chardship provisions\u201d of their NPAs as market prices dropped and electricity costs became increasingly difficult to absorb.<\/p>\n ADVERTISEMENT:<\/p>\n CONTINUE READING BELOW<\/p>\n<\/div>\n<\/div>\n<\/blockquote>\n In response, Eskom applied for a temporary waiver of take-or-pay obligations, which Nersa approved for a limited period. While this helped stabilise operations temporarily, it highlighted the urgency of establishing a more sustainable, long-term solution.<\/p>\n The joint venture (JV) started shutting down furnaces in 2021 due to rising electricity costs and market weakness, and earlier this year mothballed its Boshoek and Wonderkop smelters.<\/p>\n Production was also suspended at the Lion smelter, the only remaining ferrochrome operation within the JV, but has since restarted. Its long-term viability hinges on ferrochrome price recovery and energy cost relief.<\/p>\n Eskom says it is committed to finding solutions that safeguard South Africa\u2019s industrial capacity while protecting electricity consumers from unintended cost impacts.<\/p>\n<\/blockquote>\n \u201cThe collaborative approach under the MoU reflects a shared determination by government, industry, and labour to stabilise the ferrochrome sector and secure jobs. Eskom will continue to engage transparently and constructively with all stakeholders to ensure that the agreed interventions deliver sustainable benefits for the economy and the national electricity system,\u201d said the utility.<\/p>\n Read: In September it was reported by trade union Solidarity that nearly half of Glencore-Merafe\u2019s 22 furnaces had been permanently or temporarily shut. Closure of the remaining furnaces endangered more than 2 400 jobs.<\/p>\n Follow Moneyweb\u2019s in-depth finance and business news on WhatsApp here.<\/em><\/p>\n<\/p><\/div>\n\n
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