The National Energy Regulator of South Africa (Nersa) has granted South Africa’s ferrochrome majors, Samancor and Glencore-Merafe Chrome Venture, a hefty 35% electricity relief in a desperate measure to save the country’s smelters and thousands of jobs.
The decision follows an application by Eskom in December for temporary electricity price relief for the negotiated pricing agreements (NPAs), entered into with the two companies, initially penned in 2023.
The relief period is set to last until the end of this year, with the government set to foot the bill for the relief, something that the National Treasury might weigh in on in the budget speech next month.
Nersa told the special extended electricity subcommittee on Thursday that the relief to the two companies will save more than 24,000 jobs across the value chain.
Nersa’s Willibrod Majola said South African smelters face a near-death experience if they do not get financial relief in the form of tariff relief.
“We are requesting an electricity price relief of 87.7c per kilowatt hour [from the R1.36c contained in the 2023 NPA]. This is subject to the approval of the government funding mechanism,” Majola said.
“This funding mechanism will ensure that the shortfall between the approved NPA and the temporary electricity relief is not recovered through the regulatory clearance account.”
The smelters had applied for 62c per kilowatt hour.
Glencore-Merafe in December gave the government one week to offer it more competitive electricity tariffs before it pulls the trigger on 2,500 retrenchments and the idling of two smelters in early 2026.
Samancor Chrome and Glencore-Merafe are major producers of ferrochrome in South Africa, operating multiple smelters and chrome ore mines.
“From the time we had the NPA approved in 2023, our condition of the approval was that Eskom would every six months present a report to the regulator on how this approved NPA is actually supporting jobs. This has been monitored by the regulator,” Nersa’s Rhulani Mathebula said.
“We are aware that there are in excess of 4,000 jobs that are directly impacted by this NPA and more than 20,000 jobs that are indirectly impacted. It is this same number that we are in support of in this current application, so that we will be preserving going forward.
“The smelters were direct in their application by indicating that if they don’t get support, they will not be able to continue and may be forced to retrench workers.”
Business Day reported earlier this year that Nersa was fast-tracking the application by Eskom to reduce the NPA tariffs applicable to Samancor and the Glencore-Merafe in a last-ditch effort to save the country’s ferrochrome industry. This is after the power producer asked Nersa for expedited processing to allow smelters to commence phased restarts this month.
Government funded
Eskom indicated 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.
The regulator added that electricity represents 35%-40% of ferrochrome production costs, rendering South African smelters less competitive.
Three years ago, Nersa approved Eskom’s six-year NPAs with six Samancor and four Glencore-Merafe ferrochrome smelter operations in Limpopo, Mpumalanga and the North West. However, both Samancor and Glencore-Merafe last year declared hardship under the take-or-pay provisions of their NPAs. To this end, Eskom in December made a further application requesting temporary tariff relief for both Samancor and Glencore-Merafe for a period of 12 months
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.
Other smelters outside Samancor and Glencore are also seeking relief. On extending the relief to other smelters, Nersa said it was not at its behest to do so.
“It is not the regulator who initiates who this agreement should include. The framework is that when the smelters and Eskom have reached an agreement, they then apply to the regulator to have that agreement approved,” Mathebula said.
“In this case, there are other smelters that approached with a relief request, and we have referred them to Eskom because the process starts with them applying at Eskom.”
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,” Tips said in its latest real economy bulletin.
“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.
“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.”
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