Minister of Electricity and Energy Kgosientso Ramokgopa said on Wednesday his energy delegation has engaged with global and local CEOs of ferrochrome smelters at the World Economic Forum (WEF) in Davos, Switzerland, in a bid to cushion and develop the industry for beneficiation. The intervention aims to sustain a proposed tariff of 62 cents per kilowatt-hour for smelters, as the sector faces retrenchments driven by high electricity costs.
Ramokgopa said stakeholders — including government, Eskom, labour unions and smelters — had worked to restructure the tariff from R1.35 per kilowatt-hour to save jobs, and that the WEF was being used to facilitate high-level discussions.
“We are here engaging global CEOs of some of these entities. We have already engaged domestic CEOs, and we are aligned. Of course, the details still need to be worked out. The point is that the cost cannot be socialised; it must be carried by this intervention. Otherwise, we fix one area and create pressure elsewhere in the South African economy, including for households.
“For them [the global CEOs], we are sitting on stranded assets that we can make available — coal at a price that allows us to translate the overall cost of conversion to 62 cents,” Ramokgopa said.
“We believe we have found a unique solution. If you look at the price of electricity, the primary driver is the cost of coal, which accounts for about 40% of the price. If we are able to bring that down, then we are in the sweet spot — we are in the game. We are designing a solution for this industry and, when it works — not if — we will roll out the template across the country.”
This comes as Ramokgopa and Eskom evaluate submissions from ferrochrome producers, including Glencore and Samancor Chrome, on plans to allow embattled smelters to continue operating while a longer-term, sustainable pricing arrangement is finalised. The proposals involve lower power prices through mechanisms that do not rely on Eskom or government subsidies.
Last week, the Department of Trade, Industry and Competition (Dtic) gazetted block exemptions aimed at allowing firms in distressed industries to collectively negotiate lower electricity prices and enter into a negotiated pricing agreement (NPA) with Eskom without breaching the Competition Act.
South African smelters have lost competitiveness following electricity tariff increases of more than 900% since 2007, pushing power costs to about 60% of total production expenses, the publication said. The crisis has left 12 terawatt-hours of production capacity idle, while another seven terawatt-hours have disappeared since 2020, eliminating an estimated 350 000 jobs and significant Eskom revenue.
Cabinet approved an intervention plan in June 2025 identifying discounted electricity tariffs as key to stabilising the ferrochrome sector. However, the Glencore-Merafe Chrome Venture has said Eskom’s solution remains inadequate, with only its Lion facility expected to continue operating.
Ramokgopa said on Wednesday that, despite holding a “disproportionate share” of global chrome reserves — about 80% — South Africa was failing to fully benefit because it exported roughly 80% of its chrome ore to China.
“We are losing out on the benefits of beneficiation. It’s about putting the ore through furnaces in various smelters and converting it into ferrochrome. You are domesticating employment opportunities down the value chain, creating more jobs — and these are good-quality jobs.
“More significantly, the raw price of chrome is about US$150 per tonne. Once beneficiated, it rises to around $1150. That means taxes are far higher in rand terms, and the value of taxes on beneficiated ore is significant,” Ramokgopa said.
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