Glencore’s South African ferrochrome unit could walk away from talks with the government over a discounted electricity package due to what it sees as unfavourable conditions, an executive said on Thursday.<\/p>\n\n\n\n
Glencore has said it requires reduced tariffs to keep its loss-making smelters open and avert job cuts. <\/p>\n\n\n\n
The government is keen to save the smelters, which employ thousands and are major customers of the state-owned electricity supplier Eskom.<\/p>\n\n\n\n
Eskom, on February 27, offered the country’s two biggest ferrochrome firms, including the Glencore unit, heavily discounted electricity in a bid to rescue their troubled operations.<\/p>\n\n\n\n
The offer to reduce electricity tariffs from R1.36 to R0.62 per kilowatt hour is subject to approval by South Africa’s energy regulator, under conditions yet to be made public.<\/p>\n\n\n\n
But Glencore Ferroalloys CEO Japie Fullard warned the company could walk away from the talks, saying some conditions of the package deal were unacceptable.<\/p>\n\n\n\n
“The terms and conditions, the way that it is now, I unfortunately will not be in a position to sign,” Fullard said at a mining conference in Johannesburg.<\/p>\n\n\n\n
“So that means, if they do not come to the party, we are going to walk away from the 62 cents (deal),” he added.<\/p>\n\n\n\n
Fullard said representatives of the ferrochrome firms were meeting government representatives this week.<\/p>\n\n\n\n
Glencore, on March 2, deferred lay-off procedures at its ferrochrome operations until March 31 to allow ongoing negotiations. <\/p>\n\n\n\n
As many as 1,500 jobs would be cut if no agreement is reached on the electricity tariff package, Fullard added.<\/p>\n\n\n\n
Samancor Chrome, the other ferrochrome producer which was offered discounted electricity, has said it is going ahead with plans to lay off workers. <\/p>\n\n\n\n
The firm said while the reduced tariff addressed electricity cost pressures, the terms and conditions attached to the offer posed “a threat to the long-term viability of the ferrochrome industry”.<\/p>\n\n\n\n
Neither Glencore nor Samancor have disclosed the conditions as negotiations are ongoing.<\/p>\n\n\n\n
South African smelters are battling high electricity costs, which have risen tenfold since 2008, amid growing competition from Chinese producers. <\/p>\n\n\n\n
Only 11 of the country’s 66 smelters are still operational.<\/p>\n","protected":false},"excerpt":{"rendered":"
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