In a move aimed at preventing further decline in the country’s ferrochrome sector, energy regulator NERSA has approved a discounted power tariff for Samancor Chrome and the Glencore-Merafe ferrochrome joint venture, giving the companies access to electricity at 62 South African cents ($0.038) per kilowatt-hour.
For South Africa, the stakes go far beyond chrome.
The country holds the world’s largest chrome ore reserves and remains the biggest producer of the raw mineral.
Ferrochrome is a crucial ingredient in stainless steel production, making it an important part of global manufacturing supply chains.
South Africa’s ferrochrome industry has been under pressure for more than a decade as electricity prices surged.
The closures have had ripple effects across mining communities, suppliers and exporters, raising concerns about job losses and the long-term erosion of the country’s industrial base.
A battle for beneficiation
The latest intervention comes at a time when African governments are increasingly trying to process more of their mineral resources domestically instead of exporting raw materials.
The issue has become even more important amid a global race for critical minerals and industrial supply chains, with countries seeking greater control over value-added manufacturing.
South Africa’s chrome industry sits at the centre of that debate.
While the country continues to mine vast quantities of chrome ore, much of the value generated from processing that ore increasingly accrues elsewhere.
Industry groups have long argued that high electricity costs are one of the biggest obstacles preventing local producers from competing internationally.
By approving the discounted tariff, regulators are effectively attempting to preserve local processing capacity and prevent further migration of production overseas.
Eskom said the agreements will run for different periods, five years for Samancor Chrome and three years for the Glencore-Merafe venture, but will operate under similar pricing and risk-sharing arrangements.
The utility argues that keeping ferrochrome smelters operational is not only important for industrial output but also for employment, export revenues and electricity demand.
“The framework is structured within a regulated environment, includes appropriate risk-sharing mechanisms and does not place additional financial obligations on standard tariff customers or taxpayers,” Eskom Chief Executive Dan Marokane said.
Eskom further stated that the revenue impact of the discounted tariff will be ring-fenced and cannot be recovered from households or businesses through future tariff adjustments.
Eskom’s turnaround creates room for intervention
The approval also highlights how dramatically Eskom’s position has changed in recent years.
Just a few years ago, South Africa’s electricity crisis was dominated by rolling blackouts that crippled mining and manufacturing activity.
However, improvements in plant performance and generation availability have significantly reduced power disruptions, giving the utility more flexibility to support strategic industries.
Marokane acknowledged that Eskom’s operational recovery played a role in making the arrangement possible.
“Without the success of Eskom’s turnaround over the past three years, driven by the commitment of our 40,000 employees, we would not have been in a position to support the ferrochrome industry or help prevent significant job losses,” he said.
It is a test of whether the country can retain more value from its mineral wealth, protect industrial jobs and remain relevant in a global ferrochrome market increasingly dominated by China.
The outcome could shape not only the future of South Africa’s chrome industry but also wider debates across Africa about how resource-rich economies can compete in the race to process, rather than simply export, their natural resources.