South Africa’s state power utility Eskom has finalised a discounted electricity tariff for key ferrochrome producers, in a bid to ease pressure on the struggling sector and safeguard jobs.
The utility said on Friday that a task team had agreed on a tariff of 0.62 rand (about $0.038) per kilowatt-hour for smelters operated by Samancor Chrome and a joint venture between Glencore and Merafe Resources.
Eskom said the discounted rate would not lead to higher electricity prices for consumers, nor would it require additional borrowing or further financial support from the government.
The utility added that the arrangement would ensure predictable electricity sales volumes for up to five years while helping to protect public investment in the power company.
The proposed tariff remains subject to approval by the National Energy Regulator of South Africa (NERSA), which must sign off before implementation.
The agreement follows earlier negotiations in February, when Eskom offered reduced electricity prices after the affected companies agreed to suspend planned job cuts while talks were ongoing.
South Africa, the world’s largest producer of chrome ore, has in recent years lost its position as the leading global processor of the mineral into ferrochrome, with China overtaking it — largely due to significantly lower power costs.
Ferrochrome production is highly energy-intensive, as smelters use large amounts of electricity to combine chromium and iron into an alloy widely used in stainless steel manufacturing.
Industry experts say high electricity tariffs have eroded the competitiveness of South African smelters, forcing some operations to scale back or shut down, raising concerns over job losses and declining industrial output.
Eskom, which supplies most of the country’s electricity, has faced persistent operational and financial challenges, including frequent power outages linked to its ageing coal-fired power plants.
The government has been under increasing pressure to support energy-intensive industries while stabilising Eskom’s finances and avoiding additional burdens on consumers.
The ferrochrome sector remains a key component of South Africa’s mining and manufacturing industries, contributing to export earnings and employment.
If approved, the discounted tariff is expected to provide short-term relief to producers and help sustain operations, although analysts caution that longer-term reforms will be needed to address structural issues in the power sector and improve industrial competitiveness.
The move underscores broader efforts to shield strategic sectors from rising costs and intensifying global competition, particularly as producers face pressure from lower-cost rivals in international markets.
