The Glencore-Merafe Chrome Venture has extended its retrenchment process deadline by one month to March 31 after South Africa’s power utility, Eskom presented a 62c/kWh (3.84 US cents) tariff offer on the eve of the previous February 28 cut-off date.
In a statement, the venture expressed appreciation for efforts by government and Eskom to find a tariff solution, but noted that the associated terms, conditions, and contractual framework were still being finalised and remained subject to approval by the National Energy Regulator of South Africa (Nersa).
Eskom confirmed on February 27 that it had extended the 62c/kWh tariff offer to ferrochrome producers Glencore-Merafe and Samancor, indicating that precise terms and conditions still required negotiation before the package could be submitted for regulatory approval.
The utility stated that details of the offer, including its structure, duration, take-or-pay commitments, and any risk-and-reward sharing, would only be made available once negotiations concluded.
"The venture emphasises that the specific terms and conditions of the proposed tariff are critical as these must be commercially reasonable and viable, ensuring the long-term operational stability of the smelters," Glencore-Merafe Chrome Venture said in its statement.
"As a responsible operator, the venture must ensure that no binding commitments are unduly onerous or place the business at risk."
Following consultation with employee representatives, the venture committed to extending the current termination date under the Section 189 retrenchment process. However, it cautioned that if agreement on the terms and implementation of the 62c/kWh tariff is not reached by March 31, it would have no option but to proceed with retrenchments in accordance with applicable legislation.
Both Eskom and the government have assured that other electricity customers will not subsidise the reduced tariff. Initial funding to close Eskom's revenue gap would be secured within the framework of the existing R230 billion ($14.23 billion) debt relief package extended to the utility, with an outstanding R10 billion ($619 million) transfer from National Treasury to be used this year. Eskom also aims to achieve cumulative savings of R112 billion ($6.93 billion) by 2029 to help fund the lower tariffs without breaching its commitment to keep future standard tariff hikes to single-digit levels.
Electricity and Energy Minister Kgosientsho Ramokgopa argued during a presentation that the offer could trigger a restarting of mothballed capacity, increasing the number of smelters in operation from 11 currently to 49 by the end of 2027.
He indicated the package would form the basis of a standard smelter offer that could be extended to other ferroalloy producers, including those processing manganese and vanadium.
Mathew Nyaungwa, Editor-In-Chief, Rough & Polished
