Pretoria: Electricity and Energy Minister Kgosientsho Ramokgopa has announced a comprehensive electricity tariff framework aimed at stabilizing and revitalizing South Africa's ferrochrome industry. Addressing the media on efforts to develop sustainable solutions for the sector, the Minister outlined the government's efforts to address the industry's struggles with rising electricity costs and challenging market conditions.
According to South African Government News Agency, the Minister announced government support for electricity tariff relief measures during a briefing. These measures include a significant reduction in power costs for ferrochrome producers, with proposed tariffs of around 62 cents per kilowatt-hour for major smelters like Samancor Chrome and the Glencore-Merafe venture. This marks a decrease from the interim tariff of 87.74 cents per kilowatt-hour approved by the energy regulator in January 2026, aiming to stabilize operations, prevent job losses, and attract more smelters back into production.
Ramokgopa described the intervention as a 'game changer' for the economy, attributing the turnaround at Eskom to enabling the government to support energy-intensive industries meaningfully. The intervention follows Section 189 retrenchment processes initiated by major ferrochrome producers, including Glencore and Samancor, who cited unsustainable electricity prices as their primary grievance.
Ferrochrome producers were previously paying around R1.35 per kilowatt-hour. After engagements and regulatory approval by the National Energy Regulator of South Africa (NERSA), tariffs were reduced to approximately 87 cents per kilowatt-hour. The Minister stated that the competitive benchmark is closer to 62 cents per kilowatt-hour, aligning with international competitors like China.
Working within the existing fiscal framework, including the debt relief program, the government structured a solution that does not require new funding or shift costs onto residential consumers. The initial focus is on Glencore and Samancor due to their immediate distress, but support will be extended to the broader sector through a phased approach.
South Africa currently has 66 smelters, but only 11 are operational due to high electricity costs and market pressures. The intervention is expected to see 45 smelters operating by December 2026 and 49 by December 2027, representing 74% of national capacity. The framework is projected to support approximately 11,480 direct jobs and potentially 121,392 total jobs, including indirect employment across the value chain.
The government estimates that the intervention will generate an additional R20 billion in expenditure on raw minerals for beneficiation, deliver R5.5 billion in additional tax revenue, contribute approximately R76 billion in export earnings, and provide Eskom with an additional R17.9 billion in electricity revenue from 24-hour smelter operations.
Eskom Board Chairperson, Dr. Mteto Nyati, described the announcement as a proud milestone in South Africa's journey toward industrial growth and shared prosperity, emphasizing the dual mandate of operating as a commercially viable entity while advancing developmental objectives.