Ramokgopa promises power deal to revive ferrochrome smelters amid job-loss fears

Banele Ginidza

Minister of Electricity and Energy Kgosientsho Ramokgopa, said on Thursday that the government will announce next week an agreement on the amount of electricity needed to resuscitate ferrochrome smelters in the country after Eskom's stable performance made it possible to leave "megawatts on the floor".

This is a move aimed at reviving operations and saving thousands of jobs in the embattled sector.

The intervention follows an urgent call by the National Union of Metalworkers of South Africa (Numsa), after several smelter operators, including Glencore, issued Section 189 notices to retrench workers, citing unsustainably high electricity costs.

Ramokgopa said behind-the-scenes negotiations with industry and labour had now reached consensus on the additional megawatts to be allocated to smelters.

"The intervention is over and above the framework approved by Nersa on the negotiated pricing agreement (NPA). It needed significant concessions outside the parameters of the NPA," Ramokgopa said.

"I went to the Cabinet, they gave the greenlight to proceed with the negotiations. What is helping us a big deal is the performance at Eskom. As I speak to you now, the level of performance is such that we are leaving megawatts on the floor and those are the megawatts that we should be deploying in the SA economy to get it going." 

Numsa on Thursday confirmed it had met with Ramokgopa, Eskom executives and ferrochrome CEOs, with discussions centring on a possible special electricity tariff to reopen mothballed smelters at Glencore and Samancor.

However, the union expressed frustration that companies had not withdrawn retrenchment notices Numsa's general secretary Irvin Jim accused government of dragging its feet despite Cabinet’s prior approval as the companies had not withdrawn the section 189A notices even after meeting with government. 

"We are of the view that the government is the real culprit in this matter. Cabinet took this decision a couple of months ago, and we do not understand what informs the intolerable delay by Minister Ramokgopa and Eskom in executing this decision," Jim said.

"We are of the view that we have been patient enough as a union by giving government enough time to address this challenge."

Jim warned that given the current jobs bloodbath, the industry cannot tolerate "the government's snail’s pace response".

However, Ramokgopa said that despite the decision seeming to take too long, it had been quick by the standards of the extensive negotiations, adding that a number of megawatts to be allocated to the smelters had been arrived at and it was a significant one.

Meanwhile, the National Union of Mineworkers (NUM) also expressed concern over unofficial hints from management at both companies during ongoing negotiations.

NUM chief negotiator Lefty Mashego said recently jobs were at stake at 10 smelters, including Glencore’s Boshoek, Wonderkop, and Lion facilities, and Samancor’s Ferrometals, Middelburg Ferrochrome, Tubatse Ferrochrome, Tubatse Alloys, Dikwena, and TC Smelter.

The Intensive Energy Users Group of Southern Africa (IEUG) also sounded the alarm over the Nersa and Eskom's recent settlement of R54 billion electricity price determination, which could lead to significant increases in electricity tariffs, which already account for up to 40% of production costs for some users.

As a result of the miscalculation, electricity tariffs, which were initially set to rise by 5.4% in 2026 and 6.2% in 2027, will instead spike by 8.8% over the next two financial periods to compensate for the Nersa blunder.

The new tariffs, expected to take effect in the 2026/27 financial year and into the next term (2027/28), are three times higher than the anticipated consumer inflation rate.

IEUG CEO Fanele Mondi stated that price increases, volatility, and uncertainty were major factors contributing to operational shutdowns and low investment levels in the South African market.

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