Global ferrochrome production fell by more than a fifth last year, with South Africa’s production of the steelmaking ingredient plunging 50%. Meanwhile, China’s output grew by a further 6%.
These figures, outlined in junior miner Merafe’s latest annual report, display the extent to which the Asian superpower tightened its grip on global ferrochrome markets last year, far outperforming South Africa’s declining sector.
The consequences of South Africa’s eroding competitive advantage have already been devastating for workers, with rising electricity prices forcing more than half of the country’s 59 chrome furnaces to close in recent years.
In the past few months, Merafe’s joint venture partner, Glencore, has been in urgent talks with Eskom over a substantial power discount that will keep its smelters running by slashing tariffs on Glencore and Samancor in half.
About 2,500 jobs are on the line if energy regulator Nersa does not agree to the Merafe-Glencore joint venture’s terms, with the deadline for the deal set to lapse on Thursday.
Merafe financial director Ditabe Chocho said China’s growing control of global ferrochrome markets brought the sustainability of South Africa’s smelters into question last year.
“If uncertainty and volatility had a name, it would be ‘2025′. For the South African ferrochrome industry, the year was a watershed one,” said Chocho in his letter to shareholders.
“While the venture has made great strides in managing costs, high electricity tariffs are some of the administered costs that made South Africa’s smelting industry uncompetitive compared with lower-cost producers, notably from China.
“Global ferrochrome production growth remains a key risk to supply balance and pricing, and China is a key contributor to this risk,” he said.
Aside from tariff talks with Eskom, the firm said that a rebound in global steel markets could bode well for the profitability of South African smelters, with the world’s stainless steel production projected to increase 4% in 2026.
But a turn in the market would not be enough to offset the steady decline in South Africa’s market share, said Merafe.
“The viability of our smelting operations depends on decisive and deliberate action to materially lower energy costs for smelters as well as sustained improvement in global ferrochrome/steel demand and prices.
“Structural policy actions that change the domestic cost/benefit calculus (for example, beneficiation incentives or forced shifts in ore export policy) are another option, but their efficacy has been questioned,” said Chocho.
Global stainless steel production rose 2.2% last year driven primarily by a 2.6% increase in China’s output.
Despite the steady demand growth, however, global ferrochrome production outside China fell by about 21% over the course of the year while China’s ferrochrome output increased to account for about 60% of global supply.
The country, which started constructing huge ferrochrome plants at home and in Mongolia from about 2012, continues to commission lower-cost smelting capacity, partly by offering electricity that is more than 50% cheaper than in South Africa.
“The commissioning and higher utilisation of lower-cost smelting capacity, particularly in the second half of the year, supported this increase and displaced higher-cost producers,” said Chocho.
Merafe CEO Zanele Matlala said the group’s profit fell “drastically” in 2025, from R667m (already 62% below 2023) to R143m, as full-year attributable output fell by nearly two thirds to 112,000 tonnes.
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