Electricity tariff framework to revive ferrochrome sector

Electricity and Energy Minister Kgosientsho Ramokgopa has announced a comprehensive electricity tariff framework aimed at stabilising and revitalising South Africa’s ferrochrome industry.

Addressing the media on efforts to develop sustainable solutions for the ferrochrome industry, the Minister outlined the government’s efforts to develop sustainable solutions for the struggling ferrochrome industry. The industry has been severely impacted by rising electricity costs and challenging market conditions.

At a briefing on Friday, the Minister announced the government’s support for electricity tariff relief measures. 

These include a significant reduction in power costs for ferrochrome producers, notably proposed tariffs of around 62 cents per kilowatt-hour for major smelters such as Samancor Chrome and the Glencore-Merafe venture, down from an interim tariff of 87.74 cents per kilowatt-hour approved by the energy regulator in January 2026.

This is intended to stabilise operations, prevent job losses and attract more smelters back into production.

WATCH | Minister’s media briefing

Ramokgopa described the intervention as a “game changer” for the economy, attributing the turnaround at Eskom to enabling the government to intervene meaningfully in support of energy-intensive industries.

“It’s something that I could not have been able to announce about 18 months ago, and this has been made possible by the men and women of Eskom… for having the foresight in ensuring that we are able to design an acceptable framework that will make it possible for us to intervene in the South African economy.”

The intervention follows Section 189 retrenchment processes initiated by major ferrochrome producers, including Glencore and Samancor, which cited unsustainable electricity prices as their primary grievance.

Producers were previously paying around R1.35 per kilowatt-hour. Following 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 said the competitive benchmark is closer to 62 cents per kilowatt-hour — in line with international competitors like China.

Working within the existing fiscal framework, including the debt relief programme, government structured a solution that does not require new funding or shift costs onto residential consumers.

“We are not asking for new money. We have no intention of socialising this cost… we are working within the existing framework,” Ramokgopa said.

While the initial focus is on Glencore and Samancor due to their immediate distress, the Minister stressed that support will be extended to the broader sector through a phased approach.
“This is a phased intervention. We are starting here, but we are coming to everyone,” he said.

Over 11 000 direct jobs
The Minister noted that South Africa has 66 smelters, but only 11 are currently operational due to high electricity costs and market pressures.

He said 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.

“When I talk smelters, I’m talking jobs, I’m talking [about an] injection into the South African economy. It means families can put food on the table. We have restored their dignity.”

Economic benefits
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 to the fiscus, contribute approximately R76 billion in export earnings, and provide Eskom with an additional R17.9 billion in electricity revenue from 24-hour smelter operations.

Ramokgopa emphasised that the measures are not subsidies, but competitiveness interventions aimed at retaining beneficiation at source and breaking from historical extraction patterns.

“President [Cyril] Ramaphosa has made the point that we must move away from colonial patterns of extraction. There must be beneficiation at source. Electricity is the first mover in that process,” Ramokgopa said.

He added that the intervention represents the most significant announcement of his tenure as Minister.
“This is the gain we spoke about. We have paid the pain of load shedding. Now is the time for the return,” he said.

Industrial growth
Eskom Board Chairperson, Dr Mteto Nyati, described the announcement as a proud milestone in South Africa’s journey toward industrial growth and shared prosperity.

“We stand here not just to announce support for our smelters, but to celebrate what became possible when a utility recommits to its purpose. Our purpose is powering growth sustainably,” Nyati said.

He noted Eskom’s dual mandate, to operate as a commercially viable entity while advancing developmental objectives.

“Commercially, we must operate efficiently, deliver reliable power, manage our costs and secure financial health. Developmentally, we must recognise the critical role electricity plays in enabling jobs, beneficiation, exports and communities to thrive,” Nyati said. – SAnews.gov.za