Energy regulator approves power cost relief for ferrochrome makers
South Africa's energy regulator on Thursday approved an application by Eskom to reduce electricity tariffs by 35% for two distressed ferrochrome operations battling high power costs.
More than a dozen smelters have shut down in South Africa in recent years, leading to thousands of job losses, largely due to high electricity costs which have surged by more than 900% since 2008.
State power utility Eskom in December sought the National Energy Regulator of South Africa's approval for a tariff reduction for Samancor Chrome as well as a joint venture between Glencore and Merafe Resources in a bid to avert smelter closures and save jobs.
Samancor Chrome and the Glencore-Merafe joint venture started processes late last year to shut down their smelters and lay off workers, citing viability problems mainly related to high electricity costs.
The approval is subject to the government funding the difference between the current tariff of 1.36 rand ($0.0864) per kilowatt hour and the 87.74 South African cents per kilowatt hour the two ferrochrome firms will pay for 12 months starting in January 2026, Nersa official Willibrod Majola said during a virtual briefing.
The cost of the shortfall should not be borne by standard tariff customers, Majola added.
South Africa, the world's biggest chrome ore producer, has lost its position as the world's top processor of chrome into ferrochrome to China mainly due to high electricity costs.
Energy-intensive smelters combine chromium and iron to produce ferrochrome, which is mainly used in steel production.
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