Glencore’s ferrochrome operations in South Africa are facing uncertainty as the company signals it may withdraw from negotiations with the government over a proposed discounted electricity package.
Glencore’s ferrochrome operations in South Africa are uncertain as negotiations over discounted electricity rates with the government stall.Without lower power costs, Glencore’s unprofitable smelters may shut down, risking up to 1,500 jobs.Eskom offered discounted electricity rates to Glencore and Samancor Chrome, but final approval from Nersa is still pending and terms are undisclosed.South Africa’s power sector faces serious challenges, with rising costs making smelters unprofitable and competition from cheaper Chinese producers increasing pressure.
The multinational says that without lower power costs, its loss-making smelters cannot remain viable, putting jobs at risk.
On February 27, Eskom, the state-owned electricity utility, offered steeply discounted rates to South Africa’s two largest ferrochrome producers, including Glencore, in an effort to keep the plants operational.
Japie Fullard, CEO of Glencore Ferroalloys, confirmed that company representatives are actively engaging with government officials over the disputed electricity tariff package.
To give talks a chance to succeed, Glencore has postponed its lay-off plans until 31 March. Fullard cautioned that up to 1,500 positions could be eliminated if the negotiations fail.
In contrast, Samancor Chrome, another leading ferrochrome producer that received a discounted electricity offer, has indicated it will move forward with its workforce reductions despite ongoing discussions.
The proposal still requires approval from the National Energy Regulator of South Africa (Nersa), and the final conditions have not been disclosed publicly.
South Africa’s power sector faces serious challenges, with rising costs making smelters unprofitable and competition from cheaper Chinese producers increasing pressure
The country’s power sector has struggled for years, plagued by aging infrastructure, frequent outages, and chronic underinvestment.
Rising energy costs, now nearly ten times higher than in 2008, have made running energy-intensive smelters increasingly unprofitable, particularly as Chinese producers offer cheaper alternatives in the global market.
Glencore Ferroalloys CEO Japie Fullard said the current terms are unacceptable. “The conditions, as they stand, unfortunately do not allow me to sign. This means that, if no agreement is reached, we will walk away from the 62-cent deal,” he told delegates at a mining conference in Johannesburg.
In the meantime, Glencore has postponed layoffs at its plant until March 31 to give talks a chance to continue.
High power costs have already forced many South African smelters to shut down. Of the 66 potential ferrochrome operations in the country, only 11 remain active.
If Glencore exits, it would add to a growing list of industrial closures, underscoring how critical electricity pricing and generation reforms are to sustaining local mining operations and safeguarding employment.
