Nersa throws South Africa's ferrochrome smelters a 62c/kWh lifeline

South Africa's National Energy Regulator, Nersa, approved an amended negotiated pricing agreement framework on 29 May 2026 giving ten ferrochrome smelters — six run by Samancor Chrome and four by the Glencore-Merafe Chrome Venture — an interim concessionary electricity tariff of 62c/kWh. Eskom had applied for the arrangement in April, and Nersa held public hearings on 25 May before approving it.

A steep discount, but a lifeline

The 62c/kWh rate represents a 75% discount to Eskom's standard tariff of roughly 250c/kWh, and a further cut from the 87.74c/kWh interim relief rate that had applied since January 2026. The agreement runs for five years, extending the original negotiated pricing framework for ferrochrome producers by a further two years.

An industry in collapse

The decision followed a sustained deterioration in South Africa's ferrochrome industry, where the number of operating smelters fell from a peak of 66 to just 11 as Eskom tariffs rose more than 900% since 2008. Samancor Chrome had already issued a Section 189 retrenchment notice in March 2026 covering the majority of its 2,403 smelter and corporate employees, citing unsustainable electricity costs, while Glencore-Merafe had signalled its own restructuring risk.

Why the state acted

The ferrochrome sector directly and indirectly supports as many as 185,000 jobs across Mpumalanga, Limpopo and North West, and the prospect of further smelter closures on top of those already idled carried significant political weight. By approving a tariff well below Eskom's cost-reflective rate, Nersa effectively asked the utility's other customers to help subsidise a sector regulators judged too important to lose.

Not a permanent fix

Industry executives have cautioned that the tariff, while critical, is not a silver bullet: at 62c/kWh, ferrochrome producers say they can utilise existing infrastructure rather than generate strong margins, particularly with Chinese ferrochrome supply keeping global prices under pressure. The approval nonetheless gave Samancor and Glencore-Merafe the certainty needed to begin reversing retrenchment plans and restarting idled furnaces through the rest of 2026.

Sources

• Mining Weekly: Eskom confirms Nersa's approval of concessionary tariff for ferrochrome smelters, 29 May 2026
• Moneyweb: Glencore-Merafe halts layoff plans as Nersa throws smelters a lifeline, 01 Jun 2026

Photo: A ferrochrome smelter plant in Lydenburg, Mpumalanga, South Africa. JMK, Wikimedia Commons, CC BY-SA 3.0.