A Lifeline for Industry: South Africa Lets Big Power Users Bargain as One

In a decisive move to prevent the collapse of entire industrial sectors, the South African government has temporarily rewritten the rulebook on competition. Trade and Industry Minister Parks Tau has amended antitrust regulations, allowing companies in “industries in distress” to band together to negotiate cheaper electricity supply, share backup generation, and collaborate with power suppliers.

The amended block exemption, published on 5 January, is a direct response to an existential crisis. While it doesn’t name specific sectors, the desperate situation in the ferrochrome and manganese processing industries is the clear catalyst. These energy-intensive businesses, which employ thousands, are buckling under the weight of electricity costs that have tripled over 15 years, far outpacing inflation. Compounded by fierce Chinese competition, they have been forced to idle plants and announce sweeping job cuts.

A Necessary Exception to Save Jobs

The logic is one of survival. Individual companies, especially those bleeding cash, have little bargaining power against a near-monopoly supplier like Eskom. By allowing them to form a collective “energy users” bloc, the government hopes they can negotiate more favourable tariffs and invest jointly in alternative power solutionsactions normally forbidden under strict competition law to prevent collusion.

This is not about fixing prices of their end products; the exemption strictly prohibits that. It’s about giving them a fighting chance to lower their single biggest input cost. As one industry player after anotherfrom Glencore to Samancor Chrome and Transalloysannounces closures and layoffs, the state is effectively acknowledging that traditional competition rules could strangle what remains of these strategic industries.

A Symptom of a Deeper Crisis

The intervention underscores the profound depth of South Africa’s energy crisis. Years of load-shedding, mismanagement at Eskom, and soaring tariffs have eroded the country’s industrial base. This regulatory shift is a stopgap, aligning with a cabinet plan approved in June to negotiate sector-specific electricity prices and consider export taxes on raw chrome ore to incentivise local processing.

For now, it’s a win for major power users on the brink. They have been handed a rare tool to collectively bargain for their survival. However, it also highlights a grim reality: the market, as it stands, is failing them. The long-term solutionaffordable, reliable power for allremains frustratingly out of reach, but this exemption offers a temporary rope to keep key employers and exporters from going under.

{Source: MyBroadband}

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