- Eskom has signed a Memorandum of Understanding (MoU) with major ferrochrome producers Samancor Chrome and the Glencore–Merafe Chrome Venture, paving the way for a joint plan to stabilise an industry under severe pressure from weak global markets and rising production costs.
The agreement, concluded on Friday following talks with the Minister of Electricity and Energy and organised labour, commits the parties to develop a sustainable, long-term support mechanism for the sector. A multi-stakeholder task team, comprising Eskom, the two producers, and government representatives, will now draft proposals aimed at improving the industry’s competitiveness while ensuring that any electricity-pricing solutions do not shift additional costs onto other consumers. A proposed intervention is expected within three months.
Samancor and Glencore–Merafe currently operate under Negotiated Pricing Agreements (NPAs) approved by the National Energy Regulator of South Africa (NERSA) in late 2023. These six-year agreements, introduced earlier this year under a long-term framework issued by the former Department of Mineral Resources and Energy in 2020, are designed to offer qualifying energy-intensive industries more competitive power tariffs to support production and protect jobs.
But as global market conditions deteriorated this year, both companies invoked hardship clauses in their NPAs, saying they could no longer absorb rising electricity costs. Eskom responded by applying for a temporary waiver of take-or-pay requirements, which NERSA approved for a limited period. While this helped stabilise operations, the utility said it underscored the need for a durable solution.
Interim tariff under review
NERSA is currently assessing an application for an interim tariff adjustment for the two smelters, while government works on a complementary mechanism intended to create a more competitive pricing path over the coming months.
Once an interim tariff is approved, the smelters have agreed to suspend a Section 189 retrenchment process and restore around 40% of furnace capacity while longer-term measures are finalised under the MoU.
Eskom stressed that any intervention must balance industrial support with the protection of households and small businesses from unintended cost impacts.
“Eskom welcomes the collaborative efforts of government, labour, and industry. The MoU creates a structured process to find a sustainable and responsible solution that maintains industrial capacity while protecting broader electricity consumers,” said Eskom’s Group Chief Executive, Dan Marokane.
The utility said it will continue to work closely with stakeholders to ensure the planned interventions are both economically sustainable and beneficial to the national electricity system.
Author: Bryan Groenendaal
