Glencore’s South African ferrochrome smelting business has scrapped plans to lay off up to 1,500 workers after regulators approved a steep reduction in electricity tariffs for the energy-intensive sector, offering relief to struggling producers.
The decision marks a significant turnaround for the mining and smelting group, whose local joint venture, Merafe Resources, had begun consultation processes for job cuts following production suspensions at several of its key smelters.
The affected facilities include the Boshoek, Wonderkop and Lion smelters, which were halted in May 2025 after rising electricity costs rendered operations commercially unviable.
However, the National Energy Regulator of South Africa (NERSA) has now approved a discounted tariff structure that reduces electricity costs by about 54 percent to approximately R0.62 (US$0.0382) per kilowatt-hour for ferrochrome producers.
The revised pricing arrangement is expected to improve the viability of smelting operations and support the gradual restart of previously idled plants, according to company statements.
Merafe said the tariff relief represents “a further step towards stabilising operations and progressing the phased restart of the business,” adding that the decision allowed the company to withdraw planned retrenchments.
The intervention comes after years of mounting pressure on South Africa’s ferrochrome industry, which has been hit by sharply rising electricity prices and increasing competition from lower-cost producers, particularly in China.
Electricity tariffs for South African smelters have reportedly risen tenfold since 2008, significantly eroding the country’s competitiveness in value-added mineral processing.
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As a result, only 11 of South Africa’s 66 ferrochrome smelters remain operational, underscoring the scale of industrial decline in a sector once dominated by the country’s abundant chrome ore reserves.
Ferrochrome, an alloy of chromium and iron used primarily in stainless steel production, is highly energy-intensive, making electricity costs a critical determinant of profitability.
South Africa remains the world’s largest producer of chrome ore, but it has lost its leading position in ferrochrome processing to China, where lower energy costs and industrial policy support have boosted production.
Industry stakeholders have long warned that without structural reforms to electricity pricing and supply reliability, further job losses and capacity closures could follow.
The recent tariff reduction, negotiated in part through engagement between ferrochrome producers and regulators, is being viewed as an effort to stabilise the sector and preserve remaining industrial capacity.
Merafe, which operates in partnership with Glencore, said the new pricing framework applies across the ferrochrome industry, including other major producers such as Samancor Chrome.
Analysts say the move could help slow the decline of South Africa’s downstream mineral processing industry, which has been under pressure from rising input costs, logistical challenges and global competition.
However, they caution that long-term sustainability will depend on broader reforms in the energy sector, including improved electricity generation capacity and cost efficiency at state utility Eskom.
The ferrochrome industry remains a key employer in parts of South Africa and a significant contributor to export earnings, making its stability a matter of both economic and social importance.
For now, the tariff relief offers temporary breathing space for producers, workers and communities dependent on smelting operations, even as structural challenges in the power sector continue to loom.
