Two of Eskom’s biggest customers get electricity at a 54% discount

The National Energy Regulator of South Africa (NERSA) has approved the implementation of a proposed electricity tariff of R0.62/kWh for ferrochrome producers Samancor Chrome and Glencore-Merafe Chrome Ventures.

This represents a 29% reduction from the previously approved tariff of R0.88/kWh, which itself was reduced by 35% in January 2026 from R1.36/kWh, and extends to the entire ferroalloy industry.

The approval of this second tariff reduction effectively means that South Africa’s ferrochrome producers are now paying 54% less for electricity than they were at the end of 2025.

The move is intended to support the country’s ferroalloy industry, which has been subject to numerous shutdowns and layoffs as it has struggled to keep up with rising energy costs, which can account for 40% of its input costs.

South Africa is the largest producer and exporter of chrome ore, with the country holding over 70% of global chromium deposits.

Despite this, the country lost its position as the top processor of chrome ore into ferrochrome, with China taking the lead due to its much lower electricity tariffs.

Only 11 of South Africa’s 66 ferrochrome smelters remain in operation, as these smelters are highly energy-intensive and thus incredibly expensive to operate.

Workers’ rights group Solidarity welcomed the approval of the reduced tariff, deeming it a “much-needed boost for an industry that had been on the brink of significant downsizing.”

In a statement, Solidarity spokesperson Cornelius van Leeuwen said the potential closure of the country’s remaining smelters would have had far-reaching implications beyond the two companies.

“When a smelter closes, it is not only employees who lose their jobs,” van Leeuwen said. “Local businesses, service providers and entire towns feel the impact.”

“That is why this decision is of great significance to the economic well-being of many communities in Mpumalanga, North West, Limpopo and other parts of the country.”

While the tariff is seen as a step in the right direction, van Leeuwen said the broader challenge of affordable electricity in South Africa needs to be addressed to ensure the sector’s sustainability.

Thousands of jobs saved

In December 2025, Eskom signed a Memorandum of Understanding with the country’s two largest ferrochrome producers, Samancor Chrome and Glencore-Merafe Chrome Ventures.

This came after both companies initiated Section 189 retrenchment proceedings, putting thousands of jobs in the ferrochrome industry at risk.

Per the MOU, Eskom proposed an initial tariff reduction of 35% for South Africa’s ferrochrome industry, which was approved by NERSA in January.

When this failed to significantly reduce losses across the sector, Eskom proposed a further 29% reduction down to its current tariff of R0.62/kWh.

Following NERSA’s approval of this new tariff proposal, Glencore-Merafe announced that it would retract its Section 189 retrenchment proceedings.

This will reportedly save as much as 1,500 jobs which were at risk of being terminated since the company’s retrenchment proceedings began on 2 December 2025.

In an interview with 702, Glencore Alloys CEO Japie Fullard said the company will now spend the next six months rebuilding its operations.

“We are going to take the next couple of months to rebuild stock, spend capital and make sure that we are production ready,” Fullard said.

“Within the next couple of months, we will be able to restart. I think this is a turning point for the whole of South Africa, and the ferroalloy industry is going to have a massive advantage from this.”

Fullard explained that per the new agreement, the company will be required to take at least 80% of the power that is made available to it.

He said this was to be expected as that is where the company’s baseload sits, and this will then secure Eskom a certain revenue benchmark even at the reduced tariff.

According to NERSA, this will also ensure that the tariff shortfall does not need to be passed on to other consumers, assuaging concerns over potential subsidising.

This condition will only come into effect at the end of the next six months, giving Glencore an opportunity to rebuild enough in order to sufficiently meet this demand.

Samancor has not yet announced whether it too will retract its Section 189 proceedings, meaning 2,400 jobs are still at risk of potentially being terminated at the company.