South Africa’s energy regulator has approved an application by Eskom to reduce electricity tariffs by 35% for two ferrochrome operations facing financial difficulties due to high power costs.
Over the past several years, more than a dozen smelters in South Africa have ceased operations, resulting in thousands of job losses. This trend is largely attributed to electricity prices, which have increased by over 900% since 2008.
In December, state-owned utility Eskom requested approval from the National Energy Regulator of South Africa (Nersa) for a tariff reduction benefiting Samancor Chrome and a joint venture between Glencore and Merafe Resources. The initiative aims to prevent further smelter closures and preserve employment within the industry.
Both Samancor Chrome and the Glencore-Merafe joint venture began processes to close their smelters and lay off workers at the end of last year, citing unsustainable operating costs driven primarily by electricity expenses.
According to Nersa official Willibrod Majola, the tariff reduction is contingent on government funding the difference between the current rate of 1.36 rand ($0.0864) per kilowatt hour and the new rate of 87.74 South African cents per kilowatt hour that the companies will pay for a period of 12 months beginning January 2026. Majola emphasized that standard tariff customers should not bear the cost of this shortfall.
South Africa, the world’s largest chrome ore producer, has relinquished its position as the leading processor of chrome into ferrochrome—primarily to China—due largely to escalating electricity costs.
Ferrochrome production, which requires significant energy input, involves combining chromium and iron and is essential for steel manufacturing.
