Workers at Glencore-Merafe Chrome Venture will head into the Easter holidays on the edge of their seats as talks over the impasse in ferrochrome tariff discounts enter a crucial period, with job losses still very much on the cards.
The joint venture said on Tuesday that while the proposed 62 c/kWh tariff has been approved in principle, the process has now moved to finalising the associated terms and conditions, “to ensure that the commercial arrangements are workable, financially sustainable and operationally viable for both Eskom and the venture”.
Business Day understands that Eskom held a board meeting on Friday to discuss the issue. The successful conclusion of the discussions will cut the cost of electricity they have been using to smelt raw chromite ore into a processed, beneficiated export, by more than half.
The venture said it was awaiting internal governance approvals, with the power producer having asked for a one-week extension to conclude its processes.
“Given the importance and urgency of achieving a viable outcome, the venture has agreed to extend the ongoing section 189 process until April 7. The venture welcomes the progress made to date and remains confident that a balanced and workable solution can be reached,” the venture said.
“Engagement with Eskom, the government and all relevant stakeholders will continue to ensure that a sustainable resolution is achieved as soon as possible.”
The deal, which offers Glencore and Samancor a substantial power discount in exchange for keeping their ferrochrome smelters running, was on a knife’s edge last week after the miner gave Eskom less than a week to agree to its latest terms.
The power utility has already granted the sector a hefty 54% electricity tariff reduction as part of a broader smelter support package announced in February.
Glencore submitted a counterproposal to Eskom and the government earlier this month, which is subject to approval by South Africa’s national energy regulator (Nersa).
Glencore warned last year that if the revised proposal is not submitted to Nersa by March 31, the company will proceed with retrenching 2,500 workers as originally planned — a decision that it has now delayed after Eskom asked for a week’s extension.
The proposed discount aims to revitalise South Africa’s ferrochrome smelting sector by levelling the playing field with China.
By keeping smelters online, it would also protect Eskom’s bottom line, given that Glencore and Samancor, the other chrome smelting giant in line for relief, are major customers of its power.
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