Glencore’s South African Ferrochrome Operations at Risk Amid Electricity Tariff Dispute

Glencore Faces Uncertainty in South Africa as Ferrochrome Plants Struggle With High Power Costs

Glencore’s ferrochrome operations in South Africa face growing uncertainty as the company signals it may withdraw from negotiations with the government over a proposed discounted electricity package.

Without lower power costs, the multinational warns, its loss-making smelters cannot remain viable, putting thousands of jobs at risk.

On February 27, Eskom, South Africa’s state-owned electricity utility, offered steeply discounted rates to the country’s two largest ferrochrome producers, including Glencore, in an effort to keep the plants operational.

Japie Fullard, CEO of Glencore Ferroalloys, confirmed that company representatives are actively engaging with government officials over the disputed electricity tariff package.

To allow negotiations to continue, Glencore has postponed its planned layoffs until March 31. Fullard cautioned that up to 1,500 positions could still be cut if the talks fail.

In contrast, Samancor Chrome, another leading ferrochrome producer that received a discounted electricity offer, has indicated it will proceed with workforce reductions despite ongoing discussions.

The proposed tariff package still requires approval from the National Energy Regulator of South Africa (Nersa), and the final conditions have not been publicly disclosed.

South Africa’s Power Sector Under Pressure

South Africa’s electricity sector faces long-standing challenges, including aging infrastructure, frequent outages, and chronic underinvestment.

Rising energy costs now nearly ten times higher than in 2008 have made operating energy-intensive smelters increasingly unprofitable, especially as Chinese producers offer cheaper alternatives in global markets.

Fullard described the current terms as unacceptable. “The conditions, as they stand, unfortunately do not allow me to sign. This means that, if no agreement is reached, we will walk away from the 62-cent deal,” he told delegates at a mining conference in Johannesburg.

High power costs have already forced many South African smelters to shut down. Of the 66 potential ferrochrome operations in the country, only 11 remain active.

If Glencore exits, it would add to a growing list of industrial closures, highlighting the critical need for electricity pricing and generation reforms to sustain local mining operations and protect employment.