Another smelter threatens shutdown over crippling electricity prices

Global metallurgical producer Ferroglobe said in a statement that it will be forced to shut down operations in SA unless it receives electricity tariff relief by 1 April 2026.

The company operates smelters in Polokwane and Mpumalanga, fed by quartz mining operations across both provinces. It has about 300 permanent staff and 288 long-term contractors, creating nearly 4 000 indirect jobs.

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The company said it has absorbed losses for several years to maintain operations and avoid job losses, but the current electricity pricing structure has made continued operations untenable.

Ferroglobe SA’s announcement follows the issuing of retrenchment notices by South Africa’s two largest chrome smelter operators, Glencore-Merafe and Samancor Chrome.

Electricity tariff challenges

Government and Eskom have agreed to a reduced electricity tariff of 62c per kilowatt hour (kWh), which is roughly half of what was being paid a year ago, but there is still no final agreement on the terms and conditions, nor has the National Energy Regulator of SA (Nersa) signed off on the tariff.

Glencore-Merafe has delayed the implementation of its Section 189 retrenchment process until tomorrow (31 March), pending agreement on the terms of the tariff.

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Read: Glencore-Merafe chrome smelter deal with Eskom hits a snag

The National Union of Metalworkers of SA (Numsa) has warned that it will not allow the electricity tariff negotiations to be used as an opportunity to lay off workers.

Glencore-Merafe and Samancor Chrome employ roughly 4 000 workers between them, but upwards of 300 000 direct and indirect jobs are potentially at risk as a result of smelter closures across the steel and manufacturing industries, according to trade union Solidarity.

Electricity tariffs have soared 900% since 2007, resulting in all but 11 of the country’s 66 smelters being mothballed.

Last month, ferroalloy producer Transalloys said it would be forced to shut down its R5 billion plant in Mpumalanga unless it received meaningful electricity relief.

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Speaking ahead of the 2026 Budget, CEO Konstantin Sadovnik indicated that, should the company receive the same 62 tariff being considered for other smelters, there would be no need for a shutdown.

But as Moneyweb previously reported, the new tariff comes with terms and conditions that appear to be unacceptable to some.

Mozal under care and maintenance

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Earlier this month, South32’s CEO Graham Kerr announced it had placed Mozal Aluminium (Mozal) on care and maintenance.

“Over the past six years, we have engaged extensively with the government of the Republic of Mozambique, Eskom and other key stakeholders, but were unable to secure sufficient and affordable power supply for Mozal beyond March 2026.

“While this is not the outcome we wanted, we are proud of the history and significant contribution Mozal has made to the local community and the Mozambican economy in its 25 years of operation.”

Electricity accounts for 40% to 60% of the ferroalloy industry’s costs.

Other companies impacted by Eskom’s out-of-control tariffs include ArcelorMittal SA, which says up to 4 000 jobs will be affected once long steel operations at Newcastle and Vereeniging are shut down, while Columbus Stainless Steel reportedly cut production by 50% in 2025.

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