The embattled ferrochrome industry endured one of its most challenging years in recent memory in 2025, with exports plunging from a quarterly average of R20bn in 2023 to R5bn in the third quarter of last year as high energy costs and falling prices wreaked havoc with the sector.
According to data from Trade & Industrial Policy Strategies (Tips) South Africa’s worldwide exports of ferrochrome crashed by 70% in the year to the third quarter of 2025.
“In constant 2025 terms, ferrochrome exports fell almost R20bn from their peak at the start of 2023, earning just R5bn in the third quarter of 2025. In volume terms, they shrank from around a million tonnes a quarter before 2024 to just 300,000 tonnes in the third quarter of 2025,” Tips said in its latest real economy bulletin.
“The crisis in ferrochrome exports resulted primarily from sharp increases in electricity and chrome ore prices over the past five years. Electricity is the largest single input cost in ferrochrome production. The cost of electricity for the energy-intensive smelters has risen almost 50% in real terms since 2019.
“In addition, although South Africa has abundant reserves of chrome ore, local smelters pay the world price. That means that the rents from the mines go to the mine owners rather than securing South Africa’s comparative advantage in ferrochrome.”
One of the country’s largest chrome producers, Merafe Resources’ attributable ferrochrome production decreased by more than 60% last year, the company announced last week.
Merafe’s attributable ferrochrome production from the Glencore Merafe Chrome Venture for the fourth quarter of last year was 147 tonnes, resulting in a decrease of about 63% in production for the year.
Merafe holds a 20.15% stake in the Glencore Merafe Chrome Venture.
South Africa’s ability to beneficiate chrome ore into ferrochrome — an indispensable metal in the production of stainless steel — has all but come to a halt, costing the fiscus billions of rand in lost revenue, along with thousands of jobs.
Warnings ignored
This could have been avoided had the government listened to multiyear concerns from industry that things like astronomical energy costs had rendered smelting operations unviable.
South Africa, which has the largest chrome ore reserves in the world, has surrendered the competitive advantage to China, which has taken the leading role in the beneficiation process.
The cost of electricity has risen more than 800% since 2007. High energy costs are damaging South Africa’s mining industry, which accounts for about 8% of GDP, according to a study by Boston Consulting Group. The study found that South Africa’s energy costs are the fourth highest among similar mining jurisdictions.
“The net result of these trends has been a shift away from the beneficiated product, ferrochrome, toward exports of unprocessed ores. In volume terms, exports of chrome ore climbed 26% in the year to the third quarter of 2025. Since mid-2021, they have almost tripled in constant rand terms,” Tips said.
“The share of ferrochrome in total exports shrank from 3.2% in the third quarter of 2022 to 1% three years later. In the same period, the share of chrome ore climbed from 2.1% to 5%.”
The National Energy Regulator of South Africa (Nersa) is fast-tracking the application by Eskom to reduce the negotiated pricing agreements (NPAs) tariffs applicable to Samancor Chrome and the Glencore-Merafe Chrome Venture in a last-ditch effort to save the country’s ferrochrome industry.
In its application, Eskom asks for a temporary tariff reduction, designed to cover the marginal cost of electricity plus the required subsidies and legacy charges. The power producer also asked Nersa for expedited processing to allow smelters to commence phased restarts this month.
Eskom indicates in its application that the shortfall between the approved NPA tariff and the proposed reduced tariff will be funded by the department of electricity & energy through a dedicated government support process, which Eskom expects to be finalised by March.
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