Glencore-Merafe halts layoff plans as Nersa throws smelters a lifeline

The Glencore-Merafe Chrome Venture has halted layoff plans after winning approval for a 62c/kWh electricity tariff from the National Energy Regulator of South Africa (Nersa).

Nersa approved the new tariff on Thursday last week, throwing a crucial lifeline to SA’s ferrochrome smelters, most of which are operating at a loss due to high electricity prices.

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Samancor Chrome’s negotiated pricing agreement (NPA) with Eskom has been approved by Nersa for five years, and Glencore-Merafe’s for three years.

Nersa also approved a six-month relaxation of the “take-or-pay” obligations imposed on Transalloys’s ferroalloys smelter operations in Mpumalanga.

Transalloys is obligated in terms of its Eskom NPA to pay a minimum 70% contractually agreed amount of electricity each month, whether consumed or not. That condition will be relaxed for six months to curtail job losses and protect Eskom’s revenue.

The new tariff will be increased by consumer price inflation plus 1% from 1 April each year for the duration of the agreements.

Targeted intervention ‘justified’

“These customers are energy intensive and highly price sensitive industrial users with limited capacity to absorb tariff increases,” says Nersa in a statement.

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“Given their scale, they are also system critical and their response to pricing signals differs materially from that of other customer segments, thereby justifying a targeted intervention.

“In April 2026, Eskom applied to Nersa for approval to amend the existing NPAs with Samancor and Glencore, with the objective of providing additional electricity price relief.”

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Just 11 of the country’s 66 ferrochrome smelters are currently operational due to unsustainable increases in electricity costs.

Electricity accounts for 40-60% of smelter costs, leaving the ferrochrome sector in a critical condition as Eskom tariffs increases blew past consumer inflation rates.

Glencore-Merafe reduced operations by 63% in 2025, leaving just one out of five smelters operational by February 2026.

The 62c/kWh tariff is lower than the temporary special tariff of 87c/kWh in place until now, and the standard industrial rate of R1.36/kWh.

Agreements conditional

A condition of the new tariff agreement is that the smelter operators submit progress reports every six months on the implementation of amendments to the NPAs.

This will allow Nersa to monitor the socio-economic impacts of these agreements.

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A further condition of the agreements is that revenue shortfalls within Eskom may not be recovered from other customers.

Glencore-Merafe has halted the process of laying off staff by uplifting the Section 189 process under the Labour Relations Act. This marks a further step towards stabilising operations and progressing the phased restart of the business.

“The Venture remains focused on constructive engagement with Eskom and all stakeholders as it works to conclude the process and advance a sustainable path forward for the ferrochrome sector,” says Glencore-Merafe.

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Samancor Chrome supports about 2 230 direct and 2 665 indirect jobs. It also sustains about 3 935 permanent mining jobs and 5 864 indirect jobs across Mpumalanga, Limpopo and the North West.

Nersa says additional employment is created through corporate functions and contractor activities linked to maintenance, shutdowns, rebuilds and capital projects.

Glencore-Merafe Chrome sustains 2 059 direct jobs and a further 1 333 contractor positions across its operations in the Limpopo and North West provinces. Beyond its direct workforce, the venture is estimated to support approximately 23 744 indirect jobs through broader economic multiplier effects and linkages with the chrome and platinum mining value chains.

Eskom motivated the reduced tariff to Nersa as part of a medium-term intervention to stabilise the ferrochrome industry and prevent large-scale job losses. This provides a lifeline to the ferrochrome sector without requiring extra government bailouts or higher standard tariffs.

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