On 8 December Eskom confirmed that it had finalised a Memorandum of Understanding (MoU) with Samancor Chrome and the Glencore–Merafe Chrome Venture, following constructive engagements held with the Minister of Electricity and Energy and organised labour. The MoU formalises a joint commitment to develop a sustainable, long-term intervention for the ferrochrome sector, which has been severely affected by global market pressures and rising production costs.
In terms of the MoU, Eskom, Samancor Chrome and the Glencore–Merafe Chrome Venture will together develop a sustainable solution to enable continuing production.
The MoU establishes a joint multi-stakeholder task team comprising Eskom, the two producers, and government representatives. The team will seek to develop an intervention that supports industrial competitiveness and at the same time ensures electricity-pricing solutions do not impose additional burdens on other customers. The parties have agreed to present a proposed solution within three months.
Existing NPA framework
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. These six-year agreements, which took effect earlier this year, fall under the Interim Long-Term Framework issued by the then Department of Mineral Resources and Energy in 2020. The framework provides qualifying energy-intensive industries with access to more globally competitive tariff structures aimed at supporting production, protecting jobs, and maintaining South Africa’s industrial capacity.
Earlier this year, both smelters activated the hardship provisions of their NPAs as market conditions deteriorated and electricity costs became increasingly difficult to absorb. In response, Eskom applied for a temporary waiver of take-or-pay obligations, which NERSA approved for a limited period. While this helped stabilise operations temporarily, it highlighted the urgency of establishing a more sustainable, long-term solution.
Current processes and interim commitments
NERSA is currently processing an application for an interim tariff adjustment for the smelters. At the same time, government is working on a complementary mechanism to support a more competitive pricing path for the sector, which is expected to be finalised over the next three months.
Once the interim tariff is approved, the smelters have committed to suspend the Section 189 retrenchment process and bring about 40% of their furnace capacity back online while the long-term solution is developed under the MoU.
Eskom is committed to supporting industrial operations within a lawful and economically sustainable framework that balances the needs of industry with the rights of all customers. Safeguarding households and small businesses from unintended cost impacts remains central to Eskom’s mandate.
“Eskom welcomes the collaborative efforts of government, labour, and industry. The MoU creates a structured process to find a sustainable and responsible solution,” said Eskom Group Chief Executive, Dan Marokane.
Eskom remains committed to finding solutions that safeguard South Africa’s industrial capacity while protecting electricity consumers from unintended cost impacts. The collaborative approach framed by the MoU reflects a shared determination by government, industry, and labour to stabilise the ferrochrome sector and secure jobs. Eskom will continue to engage transparently and constructively with all stakeholders to ensure the agreed interventions deliver sustainable benefits for the economy and the national electricity system.
For more information visit: www.eskom.co.za
