The Glencore-Merafe Chrome Venture has paused a retrenchment process at its ferrochrome smelters by a month to March 31 after Eskom made a 62c/kWh tariff offer on the eve of its previous February 28 deadline for the implementation of retrenchments.

In a statement, the venture expressed appreciation for the efforts that had been made by government and Eskom to find a tariff solution. But it noted that the associated terms, conditions, and contractual framework were still being finalised and remained subject to approval by the National Energy Regulator of South Africa (Nersa).

On February 27, Eskom reported that it had extended a 62c/kWh tariff offer to ferrochrome producers Glencore‑Merafe Chrome Venture and Samancor, but indicated that negotiations on the precise terms and conditions still needed to be agreed before the package could be submitted for regulatory approval.

Eskom said the details of the offer, including its structure, duration, take-or-pay commitments, and any risk-and-reward sharing, would only be made available once the negotiations had been concluded and a submission was made to Nersa for its approval.

“The venture emphasises that the specific terms and conditions of the proposed tariff are critical as these must be commercially reasonable and viable, ensuring the long-term operational stability of the smelters.

“As a responsible operator, the venture must ensure that no binding commitments are unduly onerous or place the business at risk,” Glencore-Merafe Chrome Venture said in a statement.

It stressed that it remained committed to engaging constructively with all stakeholders to achieve a balanced and workable solution and that, following consultation with employee representatives, it had, “in good faith”, committed to extend the current termination date under the Section 189 retrenchment process.

“However, if agreement on the terms and conditions and implementation of the 62c/kWh tariff is not reached on or before 31 March 2026, the venture will regrettably have no option but to proceed with the execution of the Section 189 terminations in accordance with applicable legislation.”

Both Eskom and government have promised that other electricity customers will not be leaned on to subsidise the reduced tariff to the smelters.

Instead, the initial funding to close the revenue gap that would arise for Eskom would be secured within the framework of the existing R230-billion debt relief package that had been extended to the utility by government, with an outstanding R10-billion transfer from the National Treasury to Eskom under the package to be used to close the gap this year.

Much store was also being given to Eskom meeting its target of making cumulative savings of R112-billion by 2029 to help fund the lower tariffs to the smelters without breaching its commitment of keeping future standard tariff hikes to single-digit levels.

During a presentation to announce the offer, Electricity and Energy Minister Dr Kgosientsho Ramokgopa argued that the offer held the potential to trigger a restarting of mothballed capacity and increase the number of smelters in operation from 11 currently to 49 by the end of 2027.

He also indicated that the package being prepared for Glencore‑Merafe Chrome Venture and Samancor would form the basis of a standard smelter offer that could be extended to other ferroalloy producers, including those smelters that process manganese and vanadium.