Glencore Merafe to restart South African smelters after Eskom power deal

South Africa’s ferrochrome industry is set for a fresh start after Glencore Merafe Chrome Venture secured a new electricity pricing agreement with Eskom, clearing the way for the restart of two key smelters.

The agreement allows the Boshoek and Wonderkop ferrochrome smelters to resume operations after months of uncertainty over power costs, a long-standing challenge for energy-intensive producers. 

The restart is expected to support chrome production, protect industrial jobs and provide relief for a sector that has faced rising operating costs and weaker global demand. 

The development follows approval by the National Energy Regulator of South Africa (Nersa) of negotiated pricing agreements for Glencore Merafe and Samancor Chrome, giving both producers access to electricity at a tariff of 62 cents per kilowatt-hour. 

For South Africa, the deal also reflects a broader effort to keep strategic mining and manufacturing operations running while making use of Eskom’s improved electricity supply.

Three-year pricing deal supports restart 

Glencore Merafe said the negotiated pricing agreements provide the certainty needed to restart the Boshoek and Wonderkop smelters safely while supporting more stable operations over the next three years. 

“The conclusion of the NPAs enables the restart of the Boshoek and Wonderkop smelters,” the company said, adding that the revised pricing framework offers greater operational flexibility and supports the long-term sustainability of its ferrochrome business.

Eskom sees financial benefit 

Nersa approved the amended agreements after public hearings into Eskom’s applications.

During the process, Eskom said it would not make a profit from supplying electricity at the agreed tariff but maintained the arrangement was financially sound. 

The utility said retaining the ferrochrome producers would help it avoid a potential $3.4 billion downside linked to take-or-pay coal contracts while protecting about $2.56 billion in electricity revenue over the life of the agreements. 

Industry recovery gathers pace 

The agreement comes as Samancor Chrome also prepares to restart production. The company recently withdrew its planned Section 189 retrenchment process and said all of its smelters are expected to resume operations within six months under a separate five-year electricity agreement with Eskom. 

Electricity and Energy Minister Dr. Kgosientsho Ramokgopa has also signaled that the government will seek Cabinet approval to extend concessional electricity tariffs to other energy-intensive industries, a move that could provide additional support for South Africa’s mining and manufacturing sectors.