Business
Mines under pressure as power price dispute threatens thousands of jobs
The hum of a smelter is not just background noise in places like Steelpoort and Rustenburg. It is the sound of paycheques, school fees, and entire communities staying afloat.
Now, two of South Africa’s major chrome players are warning that even discounted electricity prices may not be enough to keep that hum alive.
A partnership under pressure
Glencore and Merafe Resources have been operating their chrome business together since 2004 under the Glencore Merafe Chrome joint venture. The venture combines chrome mining and smelting assets across the country, including the Boshoek, Wonderkop, Rustenburg, Lion, and Lydenburg smelters.
For Merafe, this joint venture is everything. It owns about 20 percent of the operation, and it is the company’s only primary operating asset. Glencore, by contrast, is a global heavyweight with a market value of around R1.4 trillion. Merafe is far smaller at about R2.9 billion.
Yet both are facing the same harsh reality: electricity costs are squeezing ferrochrome production to breaking point.
Retrenchments and stalled furnaces
Ferrochrome smelting is energy-intensive. When tariffs rise sharply, margins disappear just as quickly.
In September 2025, the joint venture began a Section 189 retrenchment process as it reviewed operations to limit job losses. It said no workable proposals had been tabled to deal with soaring electricity prices, which it described as the biggest pressure point.
Shortly afterwards, Glencore confirmed that the Boshoek and Wonderkop smelters would be idled from 1 January, with 2,400 workers served retrenchment notices.
The move sent shockwaves through mining towns. On social media and in community forums, workers and families voiced fears about what would happen next. In regions already battling unemployment, the idea of thousands more jobs disappearing hit hard.
A temporary lifeline
In December 2025, Eskom signed a Memorandum of Understanding with the Glencore Merafe Chrome Venture and Samancor Chrome. The agreement was linked to an interim tariff adjustment and saw the Section 189 processes temporarily suspended.
The breakthrough came when the National Energy Regulator of South Africa approved a 12-month interim electricity tariff of 87.74 cents per kilowatt hour for the smelters.
On 16 February 2026, the Lion Smelter in Steelpoort achieved its first ferrochrome production tap following the successful recommissioning of half its operating capacity. The joint venture expects Lion to return to full capacity by 31 March 2026.
For workers in Limpopo, that restart meant hope.
Why the fight is not over
Merafe has made it clear that the interim tariff is only a short-term solution. While 87.74 cents per kilowatt hour is significantly lower than what households pay, often at least R2 per kilowatt hour depending on the area, the company says it is still not enough to sustain operations over the long term.
According to the joint venture, all three smelters, Lion, Boshoek, and Wonderkop, would need a tariff of about 62 cents per kilowatt hour to be commercially sustainable.
That demand has reignited debate about who ultimately carries the cost of discounted power. Eskom CEO Dan Marokane has warned publicly that negotiated pricing deals for energy-intensive users can have serious flaws, with the burden potentially shifting to households.
It is a sensitive issue in a country where electricity bills already strain family budgets.
A race against the clock
The end of February 2026 is critical. It marks the deadline for commencing consultation processes under Sections 189 and 189A of the Labour Relations Act for Boshoek and Wonderkop.
In the meantime, the joint venture says it is continuing with restructuring, streamlining, and right-sizing initiatives to secure long-term viability. It is also engaging with government, regulators, labour, and community stakeholders in search of a durable tariff solution.
What happens next will not only determine the fate of specific smelters. It could shape the future of South Africa’s ferroalloys industry at a time when global competition is fierce and local operating costs are rising.
For towns built around chrome, this is more than a boardroom negotiation. It is about whether the lights stay on, both in the furnaces and at home.
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Source: Business Tech
Featured Image: allAfrica.com
