Glencore’s ferrochrome business in South Africa is under pressure, with the firm warning it could pull out of ongoing discussions with authorities over a proposed discounted power deal.
The company says its smelters, already operating at a loss, cannot survive without reduced electricity tariffs, placing thousands of jobs in jeopardy.
On February 27, Eskom introduced heavily discounted electricity rates for the country’s two biggest ferrochrome producers, including Glencore, aiming to keep their operations running.
Japie Fullard, head of Glencore Ferroalloys, stated that the company is still in active talks with government officials regarding the contested pricing arrangement.
To allow room for negotiations, Glencore has delayed its planned layoffs until March 31. Fullard warned that as many as 1,500 jobs could be lost if no agreement is reached.
Meanwhile, Samancor Chrome, which also received a similar discounted power proposal, has signaled it will proceed with job cuts despite ongoing engagements.
The proposed tariff structure still awaits approval from the National Energy Regulator of South Africa, and key details of the deal have not yet been made public.
South Africa’s electricity sector has faced persistent challenges over the years, including outdated infrastructure, repeated power outages, and insufficient investment.
Energy prices have surged sharply nearly tenfold since 2008 making it increasingly difficult for power-intensive smelters to remain competitive, especially against lower-cost producers in China.
Fullard described the current offer as unacceptable, noting that under the existing terms, the company cannot commit to the agreement and may walk away from the proposed 62-cent tariff.
For now, Glencore has pushed back its retrenchment plans to the end of March while negotiations continue.
Escalating electricity costs have already led to widespread shutdowns across the sector, with only 11 out of a possible 66 ferrochrome plants still in operation.
Should Glencore withdraw, it would deepen the wave of industrial closures, highlighting the urgent need for reforms in electricity pricing and supply to protect mining activities and preserve jobs.