South Africa Approves 62-Cent Power Tariff for 2 Ferrochrome Producers as It Tries to Reclaim Market Share
Updated
Updated · Business Insider Africa · May 29
South Africa Approves 62-Cent Power Tariff for 2 Ferrochrome Producers as It Tries to Reclaim Market Share
9 articles · Updated · Business Insider Africa · May 29
NERSA approved discounted electricity for Samancor Chrome and the Glencore-Merafe venture at 62 South African cents ($0.038) per kilowatt-hour to keep smelters running and slow the sector’s decline.
Power costs for ferrochrome smelters have risen roughly tenfold since 2008, helping China overtake South Africa in a business the country once led despite holding the world’s largest chrome ore reserves.
Eskom said the deals will last five years for Samancor and three years for Glencore-Merafe, with risk-sharing terms designed so the revenue hit is ring-fenced and not passed on to households, businesses or taxpayers.
The move follows Eskom’s operational recovery after years of rolling blackouts and reflects a wider African push to process more minerals domestically instead of exporting raw ore and ceding value-added manufacturing abroad.
What 'unworkable' terms could derail South Africa's bid to save its vital ferrochrome industry?
Can Eskom's discount for industry giants avoid burdening consumers as the new electricity market launches?
Why is a producer cutting 2,400 jobs despite a massive electricity discount intended to save them?
NERSA’s Discounted Electricity Tariff for Ferrochrome: R6.5 Billion Monthly Subsidy Sparks Debate on Industrial Policy and Consumer Burden
Overview
NERSA has approved a discounted electricity tariff for South Africa’s ferrochrome producers, aiming to support a sector that is vital but highly vulnerable due to its extreme electricity needs. Ferrochrome smelters, which must run continuously at very high temperatures, consume vast amounts of power and cannot be easily shut down. Rising electricity costs have threatened their competitiveness and survival, risking a decline in domestic production. To prevent this, other electricity customers are currently subsidizing these smelters by billions each month. The discounted tariff is seen as a crucial intervention to sustain the industry and protect jobs, but it also raises concerns about fairness and long-term sustainability.