Glencore’s South African ferrochrome division has warned it may abandon negotiations over a government-backed electricity discount package, despite a 31 March deadline on deferred retrenchment proceedings that could affect up to 1,500 workers. The warning, issued at a Johannesburg mining conference on Thursday by Glencore Ferroalloys CEO Japie Fullard, signals that the deal Eskom and the government have spent months constructing may be closer to collapse than official communications have suggested.
As reported by Reuters, Fullard told delegates that certain conditions attached to the discounted tariff offer were unacceptable to the company, and that if those conditions were not revised, Glencore would walk away from the 62 cents per kilowatt hour proposal entirely. Representatives from both ferrochrome producers and the government met on Thursday evening to attempt to resolve the outstanding points. Neither Glencore nor Samancor Chrome, the other producer party to the offer, has disclosed what specific conditions are at issue, as negotiations remain ongoing.
The smelters were paying R1.36 per kilowatt hour at the end of 2025. Eskom reduced that to an interim tariff of 87.74 cents per kilowatt hour in January 2026, following a 35.6% reduction approved by the National Energy Regulator of South Africa. The further reduction to 62 cents per kilowatt hour was announced by Eskom on 27 February, representing an additional 29% cut and effectively halving the tariff within two months. Electricity Minister Kgosientsho Ramokgopa described the 62 cents announcement as the biggest single announcement of his tenure, projecting it would protect jobs, boost exports by R76 billion, and add nearly R18 billion in annual revenue to Eskom, alongside a further R5.5 billion in tax revenue.
The stakes are considerable. South Africa’s ferrochrome sector currently has only 11 of its 66 smelters operational, and without government intervention, capacity could fall to as little as one million tonnes per annum in 2026, against an installed capacity of 4.8 million tonnes. Solidarity trade union estimates that facility closures could affect up to 7,000 workers across the sector when Samancor Chrome’s operations are included alongside Glencore’s. Samancor has already confirmed it is proceeding with redundancies, saying that while the tariff reduction addresses its electricity cost burden, the terms and conditions attached to the offer constitute a threat to the long-term viability of the ferrochrome industry. Glencore-Merafe’s Lion smelter requires electricity costs of 87 cents per kilowatt hour to reach breakeven, while its Boshoek and Wonderkop facilities require the full 62 cents per kilowatt hour reduction to be economically viable.
The structural backdrop to these negotiations is one of prolonged deindustrialisation. South Africa holds approximately 80% of the world’s known chrome reserves but has lost its position as the world’s largest ferrochrome producer to China, primarily because electricity costs — which account for up to 40% of ferrochrome production expenses — have risen more than 900% since 2008. The same dynamic has driven ArcelorMittal South Africa to place its Newcastle long steel plant under care and maintenance.
Eskom CEO Dan Marokane has committed that other electricity customers will not subsidise the smelter discount. Instead, initial funding to cover Eskom’s revenue shortfall will come from the remaining R10 billion in an outstanding transfer under the government’s existing R230 billion debt relief package, with Eskom targeting cumulative savings of R112 billion by 2029 to sustain the lower industrial tariffs without breaching its commitment to single-digit future standard tariff increases.
Marokane has indicated that restored demand from Glencore-Merafe and Samancor alone would represent 12.8 terawatt hours in annual sales for Eskom, and that a return of other idled smelters — excluding large aluminium operations — could add a further 26 terawatt hours. For an entity carrying approximately R372 billion in debt and facing R103.5 billion in municipal arrears, retaining high-volume industrial customers is as much a balance sheet imperative as it is an industrial policy decision. Whether the conditions Glencore finds unacceptable can be resolved before the 31 March deadline now represents one of the most consequential negotiations in South Africa’s industrial sector this year.
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