Power utility Eskom says it has finalised a Memorandum of Understanding (MoU) with smelters in the country, which opens a path to preventing the loss of thousands of jobs in the ferrochrome sector.<\/p>\n\n\n\n
Eskom said it signed the MoU with Samancor Chrome and the Glencore\u2013Merafe Chrome Venture, following engagements with the Minister of Electricity and Energy and organised labour. <\/p>\n\n\n\n
The MoU formalises a joint commitment to “develop a sustainable, long-term intervention for the ferrochrome sector”, which has been severely affected by global market pressures and rising production costs.<\/p>\n\n\n\n
As part of the committement, a joint multi-stakeholder task team comprising Eskom, the two producers, and government representatives will be established, with the main focus being on electricity pricing.<\/p>\n\n\n\n
Specifically, the team will develop an intervention that supports industrial competitiveness while ensuring that electricity-pricing solutions do not impose additional burdens on other customers.<\/p>\n\n\n\n
The parties have agreed to present a proposed solution within three months.<\/p>\n\n\n\n
The MoU had to be developed as the smelters started rolling out section 189 retrenchment notices to workers as their operations became to costly to run.<\/p>\n\n\n\n
Glencore announced last week that it would idle its Boshoek and Wonderkop smelters from 1 January, while 2,400 workers were served papers.<\/p>\n\n\n\n
That announcement followed another warning from Samancor Chrome, which recently said it may cut up to 2,496 jobs as it considers closing or shrinking operations.<\/p>\n\n\n\n
Ferrochrome operations blossomed in South Africa in the early 2000s, with the country becoming one of the largest producers in the world.<\/p>\n\n\n\n
However, South Africa lost its global lead to China in 2012 due to Eskom’s unreliable electricity supply and rapidly rising tariffs.<\/p>\n\n\n\n
Eskom noted that Samancor and Glencore\u2013Merafe currently operate under Negotiated Pricing Agreements (NPAs) approved by the National Energy Regulator of South Africa (NERSA) in October 2023.<\/p>\n\n\n\n
“These six-year agreements, which took effect earlier this year, fall under the Interim Long-Term Framework issued by the then Department of Mineral Resources and Energy in 2020,” it said.<\/p>\n\n\n\n
The framework provides qualifying energy-intensive industries with access to more globally competitive tariff structures aimed at supporting production, protecting jobs, and maintaining South Africa\u2019s industrial capacity.<\/p>\n\n\n\n
Earlier this year, both smelters activated the hardship provisions of their NPAs as market conditions deteriorated and electricity costs became increasingly difficult to absorb, Eskom said.<\/p>\n\n\n\n
In response, Eskom applied for a temporary waiver of take-or-pay obligations, which NERSA approved for a limited period. <\/p>\n\n\n\n
“While this helped stabilise operations temporarily, it highlighted the urgency of establishing a more sustainable, long-term solution,” it said.<\/p>\n\n\n\n
NERSA is currently processing an application for an interim tariff adjustment for the smelters. <\/p>\n\n\n\n
At the same time, the government is working on a complementary mechanism to support a more competitive pricing path for the sector, which is expected to be finalised over the next three months.<\/p>\n\n\n\n
Once the interim tariff is approved, the smelters have committed to suspending the Section 189 retrenchment process and bringing approximately 40% of their furnace capacity back online while the long-term solution is developed under the MoU.<\/p>\n","protected":false},"excerpt":{"rendered":"
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