South Africa’s Merafe Resources has announced the deferral of planned layoffs at its ferrochrome smelting joint venture with Glencore until March 31, after the state-owned power utility Eskom agreed to reduce electricity tariffs. The move comes as a temporary reprieve for workers and a potential boost for South Africa’s struggling smelting sector, which has been hit hard by high energy costs.
The Glencore-Merafe joint venture, a major player in the country’s ferrochrome industry, had initially postponed job cuts to February 28 to allow discussions with Eskom over electricity pricing. The recent tariff reduction has provided sufficient relief to further delay the layoffs, giving both management and workers additional time to assess the long-term sustainability of operations.
Eskom announced last Friday that it would lower the electricity tariff for Glencore-Merafe and Samancor Chrome to 0.62 rand (US$0.0386) per kilowatt-hour, down from an earlier agreed rate of 0.88 rand per kilowatt-hour. The cut is subject to approval by South Africa’s energy regulator. Previously, ferrochrome smelters were paying 1.36 rand per kilowatt-hour, a level that made operations increasingly uncompetitive in global markets.
Trade unions have warned that as many as 5,000 jobs could be at risk if South Africa’s smelters were forced to shut down due to high electricity costs. The recent tariff adjustment, though modest, provides a critical window for the smelters to continue production and avoid mass layoffs, at least temporarily.
“The delay in layoffs is a welcome development,” said a spokesperson for the National Union of Metalworkers of South Africa (NUMSA). “However, more needs to be done to ensure the long-term viability of the smelting sector and to protect thousands of jobs that remain under threat.”
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South African ferrochrome smelters have faced mounting pressure in recent years as global competition, particularly from Chinese producers, intensified. High electricity costs, coupled with intermittent power supply, have made local operations less competitive, prompting many smelters to reduce production or halt operations altogether. According to government figures, only 11 out of 66 smelters are currently operational.
Ferrochrome is a critical component in stainless steel production, and South Africa is one of the world’s leading producers. However, the sector’s high energy consumption has made it vulnerable to electricity price fluctuations, with smelters consuming vast amounts of power per ton of output. Industry analysts say that unless electricity costs are sustainably reduced, South Africa risks losing market share to lower-cost producers abroad.
Merafe Resources has emphasized that the joint venture remains committed to protecting jobs while working closely with Eskom and other stakeholders to secure affordable electricity. “We are grateful for the cooperation of all parties involved and hope that this tariff adjustment allows our operations to remain viable in the near term,” a company statement said.
The South African government has also expressed concern over the impact of high energy costs on industrial competitiveness. Authorities have highlighted the need for strategic interventions to ensure that smelters can continue production without threatening employment or economic stability. Reducing electricity tariffs for energy-intensive industries is seen as one such measure to help preserve jobs and maintain industrial output.
While the latest tariff reduction provides temporary relief, industry observers caution that long-term solutions are needed. These include potential infrastructure improvements, efficiency measures, and regulatory reforms to stabilize electricity costs for smelters. Without such measures, South Africa’s ferrochrome industry could continue to face challenges competing globally.
For now, the deferral of layoffs represents a positive development for workers and the industry alike. The next few weeks will be critical as Merafe, Glencore, Eskom, and regulators work to implement the new tariff and determine how the sector can achieve sustainable production while safeguarding employment.
