South Africa cuts Eskom tariffs to revive chrome jobs, boost $4.77 billion exports

South Africa is moving to steady one of its most strained industrial sectors, with Eskom agreeing to cut electricity tariffs for ferrochrome producers by more than half. Officials say the decision could help unlock R76 billion ($4.77 billion) in export earnings and bring idle smelting capacity back into use at a time when rising power costs have weighed heavily on output.

The intervention, announced by Energy Minister Kgosientsho Ramokgopa, follows months of pressure from producers who have warned that high electricity prices were forcing closures and putting jobs at risk. Ramokgopa said the package could have both immediate and lasting effects, helping companies restart operations while supporting employment in mining communities.

Eskom tariff cut may revive smelters

At the center of the plan is a 54 percent cut in tariffs, with Eskom offering electricity at about 62 cents per kilowatt-hour, down from R1.36 ($0.084). The move follows an interim rate of 87.74 cents introduced in January. Lower costs are expected to make it viable for smelters to reopen, with the number of operating facilities projected to rise from 11 to as many as 45 by December, out of 66 nationwide. By 2027, as many as 49 smelters, or about 74 percent, could be running.

The timing is tight. The announcement came just ahead of a deadline set by Glencore, which had warned it could shut its Lion, Boshoek and Wonderkop smelters without a workable energy solution. The company had already issued retrenchment notices to about 2,500 workers. Samancor Chrome is also reviewing the proposal, which will be submitted to the National Energy Regulator of South Africa if producers agree.

Tariff relief drives jobs, revenue

Government estimates suggest the impact could extend beyond the plants. Ramokgopa said the plan could create 11,418 direct jobs and support another 121,392 indirectly, offering relief to communities affected by closures. The fiscal case is also part of the plan, with authorities expecting about R5.5 billion ($345.3 million) in additional tax revenue, which Finance Minister Enoch Godongwana could deploy across the economy.

The policy is also aimed at narrowing the gap with China, where power costs for ferrochrome production are more than 50 percent lower. Since 2012, Chinese producers have expanded capacity and taken market share from South Africa, once the world’s leading supplier. By cutting electricity costs, officials are seeking to restore some of that competitiveness and lift exports.

Eskom says it will fund the tariff relief within its existing structure. Chief executive Dan Marokane said about R10 billion ($620 million) from the utility’s debt relief program will be redirected to support the measure, with safeguards in place to limit the effect on ordinary consumers. Over time, Eskom expects higher demand as smelters restart, which could add nearly R18 billion ($1.13 billion) to its revenue.

ANC chrome plan backs output revival

The move aligns with the African National Congress’s economic plan, which prioritizes the chrome sector for growth. Measures include targeted tariffs, export policies, and infrastructure investment to boost mineral export value. Support will be limited, with relief not covering all operations. Ramokgopa said South32’s Mozambican smelter, for example, will not receive aid, and about 25,000 workers there are expected to lose their jobs next month.

For now, the focus is on whether producers sign on and regulators approve the plan. If that happens, South Africa could see dormant capacity return to production, along with stronger exports and higher tax receipts. After years of strain, the sector may be getting a chance to steady itself and compete again.