The agreement follows intensive engagements with the Minister of Electricity and Energy, Kgosientsho Ramokgopa, and organised labour, amid mounting concerns over industry-wide production curtailments and imminent job losses.

The MoU formalises a joint commitment to design a sustainable, long-term intervention for a sector that has been hit hard by depressed global chrome markets, rising energy costs, and increasingly uncompetitive domestic operating conditions. South Africa remains the world’s largest producer of ferrochrome, making the industry a critical component of the country’s mining value chain, particularly for employment and export revenues.

Charting a long-term path

A multi-stakeholder task team has been established comprising Eskom, Samancor Chrome, Glencore–Merafe, and senior government representatives. The group has been mandated to fast-track the development of an intervention that restores competitiveness to the ferrochrome sector without shifting additional cost burdens onto other electricity consumers. The parties have set a three-month deadline to table a viable proposal, signalling the urgency of the crisis facing domestic smelters.

Negotiated pricing agreements under pressure

Samancor Chrome and Glencore–Merafe currently operate under Negotiated Pricing Agreements (NPAs) approved by the National Energy Regulator of South Africa (NERSA) in October 2023. The six-year NPAs, which came into effect earlier this year, fall under the Interim Long-Term Framework introduced by the former Department of Mineral Resources and Energy in 2020.

This framework was designed to shield energy-intensive industries by offering tariff structures more aligned with international benchmarks, helping safeguard jobs and preserve smelting capacity in South Africa’s minerals and metals sector.

However, both producers invoked the hardship clauses of their agreements earlier this year after a rapid deterioration in global ferrochrome prices and sustained cost pressures from power tariffs. Eskom subsequently applied for – and received – a temporary waiver of take-or-pay obligations, enabling smelters to scale down output without incurring penalties. While this relief measure alleviated immediate pressures, it underscored the need for a more durable, sector-wide intervention.

Regulator weighing interim tariff adjustment

NERSA is now considering an application for an interim tariff adjustment for the affected smelters. In parallel, government is working on an additional support mechanism aimed at improving the sector’s medium-term cost trajectory. Both processes are expected to conclude within the next three months.

Industry sources indicate that without relief, more smelters may be forced into extended shutdowns – a scenario that could undermine South Africa’s global market share and put thousands of jobs at risk across the chrome value chain.

Smelters commit to reversing retrenchments

Once an interim tariff adjustment is approved, Samancor and Glencore–Merafe have committed to suspending their Section 189 retrenchment processes. The producers have also pledged to return approximately 40% of currently idled furnace capacity to operation while the MoU-driven long-term solution is being finalised.
This move is expected to provide immediate relief to workers and stabilise upstream chrome ore demand from mining operations feeding the smelters.

Eskom reiterated that any interventions must remain economically sound and should not impose unintended cost impacts on households or small businesses.

“Eskom welcomes the collaborative efforts of government, labour, and industry. The MoU creates a structured process to find a sustainable and responsible solution that maintains industrial capacity while protecting broader electricity consumers,” said Eskom Group Chief Executive Dan Marokane. He added that Eskom will continue working transparently with all stakeholders to ensure that any approved measures strengthen South Africa’s industrial base without compromising the financial health of the national utility.

A critical moment

The collaborative approach outlined in the MoU signals a unified effort to safeguard one of South Africa’s most strategically important mineral-processing sectors. With global competition intensifying – particularly from China, Indonesia and Kazakhstan – the outcome of these negotiations will likely shape the future of the industry for years to come.

Over the next three months, the task team’s recommendations will determine whether South Africa can retain its position as a global ferrochrome powerhouse or faces further contraction in one of the country’s most energy-intensive and economically significant industries.