KEY POINTS
- South Africa has approved a 35 per cent electricity tariff reduction for two struggling ferrochrome producers to prevent closures and save jobs.
- The government will cover the difference between current power tariffs and the discounted rate for 12 months from January 2026.
- Soaring electricity prices have weakened South Africa’s ferrochrome sector and allowed China to overtake it as the world’s top processor.
South Africa’s energy regulator has approved an application by state-owned power utility Eskom to reduce electricity tariffs by 35 per cent for two distressed ferrochrome producers battling high power costs.
The approval follows Eskom’s request in December for tariff relief for Samancor Chrome and a joint venture between Glencore and Merafe Resources, as part of efforts to prevent further smelter closures and protect jobs.
More than a dozen ferrochrome smelters have shut down across South Africa in recent years, leading to thousands of job losses.
Electricity prices in the country have risen by more than 900 per cent since 2008, making operations increasingly unviable for energy-intensive producers.
Samancor Chrome and the Glencore-Merafe joint venture had already begun processes late last year to shut down their smelters and retrench workers, citing unsustainable electricity costs.
Government to Cover Tariff Shortfall
Under the approved arrangement, the two companies will pay 87.74 South African cents per kilowatt hour for 12 months starting in January 2026, compared with the current tariff of 1.36 rand per kilowatt hour.
A NERSA official, Willibrod Majola, said the government would fund the difference between the two rates. He added that the shortfall must not be passed on to standard electricity customers.
South Africa is the world’s largest producer of chrome ore but has lost its position as the leading processor of chrome into ferrochrome to China, largely due to high electricity costs.
Ferrochrome is produced by combining chromium and iron and is a key input in steel manufacturing.
