South African Energy Regulator Approves Electricity Price Reduction for Ferrochrome Smelters to 87 Cents per kWh

The South African National Energy Regulator has approved power utility Eskom's application to provide a 12-month temporary electricity price relief for two major ferrochrome producers. This measure aims to alleviate operational pressure on Samancor Chrome and the Glencore-Merafe Chrome joint venture.

Under the approved scheme, the smelters of these two companies will receive a temporary electricity price of 87 cents per kWh. Previously, the companies faced difficulties operating under the Negotiated Pricing Agreement framework, which was approved in 2023 and implemented in 2024.

The regulator held a hearing on January 27th of this year, where Eskom explained the reasons for applying for the price reduction and requested an extension of the six-month exemption period related to the Negotiated Pricing Agreement. Regarding the compensation for the electricity price difference, the power company stated that solutions are being sought through other processes.

Eskom confirmed that the 87 cents per kWh price is still insufficient to support the smelters in fully restoring their production capacity. The company is formulating a long-term plan with the goal of further reducing the electricity price to 62 cents per kWh.

When approving the temporary electricity price, the energy regulator emphasized the need to establish a government financing mechanism to ensure that the price difference is not passed on to ordinary electricity consumers. Simultaneously, Eskom is required to submit quarterly implementation progress reports to the regulator.