Eskom has asked the National Energy Regulator of South Africa (Nersa) to grant Transalloys, the country’s last remaining manganese smelter, temporary tariff relief.
This comes as authorities continue a piecemeal approach to shielding intensive energy users from the broken energy pricing framework that has hollowed out the country’s industrial base.
Transalloys’ R5bn plant in Mpumalanga is in peril, weighed down by hefty electricity prices and with the jobs of hundreds of direct employees and subcontractors on the line, with similar difficulties playing out in the ferrochrome and other industries.
Eskom has now asked the regulator for a temporary amendment to the negotiated pricing agreement (NPA) take-or-pay (TOP) terms applicable to Transalloys’ manganese ferroalloys smelter for six months.
The amendment Eskom is seeking relates to the requirement that Transalloys consume a minimum amount of electricity per quarter. If its consumption falls below that threshold, it remains liable to Eskom for payment based on the minimum, regardless of market conditions.
In effect, Eskom requests that the TOP requirement of 70% be temporarily relaxed to give the company a chance to survive.
“Despite expectations that conditions would improve during the implementation of the NPA, the situation has instead deteriorated, leaving the company with depleted cash reserves after operating at negative margins for the past three years,” Nersa said in a public consultation document, published last week.
“The high electricity costs have rendered Transalloys uncompetitive, leading to a significant build-up of unsold stock whenever the plant operates at full capacity. In December 2025, Transalloys suspended three of its furnaces, reducing its operational capacity to approximately 57%.
“This decision was driven by unsustainable electricity costs and persistent financial losses over the previous three years. A temporary relaxation or waiver of the TOP condition has therefore been proposed to prevent a total shutdown of operations.
“There is a risk that Transalloys may terminate the current NPA, which could result in permanent loss of jobs and reduced electricity sales to Eskom.”
Despite expectations that conditions would improve during the implementation of the NPA, the situation has instead deteriorated, leaving the company with depleted cash reserves after operating at negative margins for the past three years.
— Nersa
The challenges facing Transalloys illustrate how far the sector has fallen behind. In the early 2000s, South Africa was home to several smelters with a capacity to churn out about 850,000 tonnes of manganese alloys annually.
Now, Transalloys is the only player still standing, with the capacity to produce about 160,000 tonnes annually. This is despite South Africa being home to more than 75% of the world’s identified manganese ore reserves, ceding the advantage to other players and hurting the industry’s beneficiation efforts.
“Transalloys is a major producer of manganese ferroalloys on the African continent, accounting for about 80% of the world’s high-grade manganese ore reserves,” Nersa said.
“The Transalloys smelter benefits the South African economy by directly employing 282 people and 301 subcontractors and supporting additional indirect jobs. Transalloys produces 104 ktpa [kilotonnes per annum] of manganese ferroalloy products and supplies the local market and exports to international markets. Beneficiation is from South African manganese ore deposits.”
Transalloys’ predicaments reveal the soft underbelly of the NPAs Eskom enters into with its large customers, with the power producer increasingly forced to return to Nersa to ask for further relief, as it has in the case of ArcelorMittal South Africa and the Glencore and Merafe venture.
Workers in the Glencore-Merafe Chrome Venture will wait with bated breath this week for the outcomes of Eskom’s decision on the impasse in ferrochrome tariff discounts entering a crucial period, with job losses still very much on the cards.
The joint venture said last week that while the proposed 62c/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 two weeks ago 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 — extending the retrenchment process to Tuesday.
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 last month, which is subject to approval by Nersa.
Glencore warned last month that if the revised proposal was not submitted to Nersa by March 31, the company would proceed with retrenching 2,500 workers as originally planned — a decision that it has now delayed after Eskom asked for a week’s extension last week.
The proposed discount aims to revitalise South Africa’s ferrochrome smelting sector by levelling the playing field with China.
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