The Lion Smelter, located in Steelpoort, Limpopo, has successfully produced its first batch of ferrochrome since resuming operations on 16 February. A “ferrochrome production tap” refers to the process of extracting molten ferrochrome—an alloy of iron and chromium essential for stainless steel manufacturing—from the smelter’s furnace for the first time after recommissioning. This achievement follows Glencore’s efforts to reactivate 50% of the facility’s capacity, marking a significant step forward for the operation and the broader industry.
This progress comes in the wake of the National Energy Regulator of South Africa approving a temporary 12-month electricity tariff of 87.74 cents per kilowatt-hour (c/kWh). Glencore-Merafe Chrome Venture, the partnership responsible for Lion Smelter, anticipates that the plant could return to full operational capacity by the end of March if tariff conditions remain supportive.
However, while this interim tariff allows the smelter to resume production in the short term, it is not sufficient to ensure sustainable, long-term operations. The same concern applies to Glencore’s Boshoek and Wonderkop smelters. According to Glencore, all three facilities would require a significantly lower tariff of around 62c/kWh to remain commercially viable over time.
The ongoing tariff challenges have far-reaching implications for South Africa’s ferroalloys industry and the communities that depend on it. Unsustainable tariffs threaten not only the continued operation of smelters like Lion, Boshoek, and Wonderkop but also jeopardise local employment and economic stability. If these operations cannot secure affordable energy rates, production may be reduced or halted, leading to job losses and diminished support for businesses in surrounding areas.
One immediate concern is the “retrenchment consultation process”—a formal procedure required by South African law when employers consider reducing their workforce. This process involves discussions with employees and their representatives about potential job cuts, as is currently the case for the Boshoek and Wonderkop smelters and Glencore’s Carbon Division of Chartech, with a decision deadline set for 28 February. Without a viable long-term tariff solution, these facilities face the risk of permanent closures and significant job losses.
In response to these pressures, the Glencore-Merafe Chrome Venture is implementing a “right-sizing initiative”—an internal restructuring effort aimed at aligning the company’s workforce and operations with current market realities. This includes streamlining processes and optimising resources to strengthen the business’s ability to withstand global market volatility and high energy costs.
Recognising the urgency of the situation, Glencore-Merafe Chrome Venture is actively engaging with a wide range of stakeholders—including government departments, regulators, labour organisations, and community representatives—to develop a viable, long-term solution for the industry. For example, the venture is working closely with Eskom (South Africa’s primary electricity provider), the Department of Energy and Electricity, and various labour unions to negotiate more competitive electricity tariffs and to create programmes that safeguard jobs.
These collaborative efforts are intended to secure the stability of the country’s ferroalloys sector, protect livelihoods, and ensure that local economies continue to benefit from mining operations. The joint venture is hopeful that ongoing negotiations will result in an acceptable tariff arrangement before the retrenchment consultation process concludes.
As the global market continues to pose challenges, the Glencore-Merafe Chrome Venture reaffirms its commitment to working collaboratively with all parties to achieve sustainable, long-term solutions. These efforts aim to protect jobs, support local communities, and secure the future of South Africa’s ferroalloys industry. According to Glencore Ferroalloys CEO Japie Fullard, “All stakeholders are collaborating and working very hard to reach a sustainable solution, especially Eskom, labour organisations and the Department of Energy and Electricity.” Their ongoing, transparent engagement reflects a credible and proactive approach to overcoming the industry’s most pressing challenges.