Organised labour expects South Africa’s biggest ferrochrome operators to retract retrenchment notices after Eskom finally agreed to a discounted tarrif deal of 62c/kWh with Samancor Chrome and the Glencore–Merafe Chrome Venture on Friday.
The ferrochrome smelters faced job losses for about 3,500 employees.
The deal signals hope for similar industries facing strain, including steel, experts said.
Trade union Solidarity’s deputy general secretary, Willie Venter, said on Friday that the agreement reached between Eskom, Glencore and Samancor Chrome was a positive outcome for jobs in the ferrochrome smelting industry.
“We are looking forward to having the two employers retract their retrenchment notices that they embarked on a few months ago and keep the employment sustainable for the long run,” he said.
Venter said the agreement showed that there could be positive outcomes when the government, employers and other stakeholders focused on problems and looked for solutions to reduce unemployment.
The deal — subject to approval by the National Energy Regulator of South Africa (Nersa) — is expected to revive the smelting sector, which had lost its competitive edge due to rising power costs.
The Glencore-Merafe Chrome Venture said in a statement on Friday that Eskom had confirmed revised terms and conditions linked to the proposed tariff, which the venture had provisionally accepted, subject to clarifications and conditions.
“This development represents a significant and positive step forward in the Venture’s ongoing efforts to support ferrochrome beneficiation in South Africa.”
It said Eskom’s submission of the proposed tariff and revised terms and conditions to Nersa brought the ferrochrome industry closer to achieving a more sustainable operating environment.
The Minerals Council South Africa had warned that the ferroalloys industry faced closures and job losses because of the more than 900% increase in electricity prices for industrial users since 2008.
We are very excited with the commitment made by Eskom ... it also paves the way now for the rest of the ferroalloys and steel industries to get similar tariffs and negotiate on the same line
— Nellis Bester, Ferro Alloy Producers Association chair
In a statement on Friday, Eskom said the tariff intervention improved Eskom’s liquidity without requiring higher tariffs, additional Eskom borrowing or further government support.
It said the tariff paved the way for predictable sales volumes for the next five years and protected public investments in the utility.
Eskom CEO Dan Marokane said the group’s turnaround had made it possible to reach the deal.
“Without the success of Eskom’s turnaround over the past three years, delivered by our 40,000 employees, which restored consistent baseload electricity supply, for which there is currently no alternative source available to energy‑intensive users, we would not have been in a position to support the ferrochrome industry or play a meaningful role in preventing job losses," said Morokane.
He said that under the amendment of the current negotiated price agreement (NPA), Eskom would supply discounted power to smelters for up to five years with tailored pricing that met the specific commercial circumstances of each smelter.
“The ferroalloys and iron and steel segments are experiencing sustained pressure from global commodity markets, rising input costs and structural competitive challenges, and will be prioritised ahead of other smelter industry sectors,” he said.
“This approach applies a consistent economic logic while retaining the flexibility to respond to sector‑specific conditions. It is designed to avoid both undersupport, which can result in plant closures, and oversubsidisation, which can distort competition," he said.
This differentiated approach ensured that Eskom applied a consistent economic framework across the smelting sector — while avoiding the risk of unintended pricing benchmarks or cross‑sector distortions — in support of a sustainable, long‑term industry solution.
The 62c tariff at the Glencore-Merafe Chrome Venture represents a reduction in the previous tariff of 87.74c/kWh introduced in January, which was described by the Venture as a temporary measure to stabilise operations.
It followed several efforts to save the smelters, including the signing of a memorandum of understanding after meetings with the minister of electricity & energy, Kgosientsho Ramokgopa, and organised labour.
The smelters had activated the hardship provisions of their existing NPAs as market conditions deteriorated and electricity costs became increasingly difficult to absorb.
Ferro Alloy Producers Association chair Nellis Bester said on Friday that once Nersa approved the tariff, thousands of jobs would be saved.
“We are very excited with the commitment made by Eskom ... it also paves the way now for the rest of the ferroalloys and steel industries to get similar tariffs and negotiate on the same line, so that is great,” he said, referring to the NPAs.
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