Eskom finalises MoU with ferrochrome producers to stabilise struggling industry

South African power utility Eskom said on Monday it had finalised a Memorandum of Understanding (MoU) with ferrochrome producers Samancor Chrome and the Glencore–Merafe Chrome Venture as stakeholders seek long-term measures to stabilise a sector hit by weak global prices and rising operating costs.

The agreement follows talks held on Friday with the Minister of Electricity and Energy and organised labour. Eskom said the MoU formalises a joint commitment to develop “a sustainable, long-term intervention” for the ferrochrome industry, which has struggled through deteriorating market conditions this year.

The MoU establishes a multi-stakeholder task team including Eskom, the two producers and government representatives. The group will work on a proposal aimed at supporting industrial competitiveness while ensuring that electricity-pricing measures do not shift costs onto other consumers. A proposed intervention is expected within three months.

Samancor and Glencore–Merafe currently operate under six-year Negotiated Pricing Agreements approved by the energy regulator Nersa in October 2023. The deals were created under an interim framework introduced in 2020 to help energy-intensive industries access more competitive tariffs and protect jobs. Both producers triggered the hardship clauses in their agreements earlier this year as market pressures intensified, prompting Eskom to seek and receive a temporary waiver of take-or-pay provisions.

Nersa is now considering an interim tariff adjustment for the smelters, while the government works on a parallel mechanism intended to create a more competitive pricing path. Once an interim tariff is approved, the smelters have committed to suspend a Section 189 retrenchment process and return about 40% of furnace capacity to service while longer-term measures are negotiated.

Eskom said it remained focused on balancing industrial support with the protection of other customers, including households and 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 CEO, Dan Marokane.

The utility said it would continue to engage “transparently and constructively” with all parties as efforts progress to stabilise the ferrochrome sector and safeguard jobs.

BUSINESS REPORT