Eskom looks to negotiate new tariff deal to reopen smelters and save 3000 jobs

Stephen Grootes speaks to Japie Fullard, CEO Glencore Alloys, about Eskom’s move to negotiate a new electricity tariff aimed at reopening smelters and saving thousands of jobs.

Listen to the interview in the audio player below.

Eskom has entered last-minute negotiations with major ferrochrome producers to avert the shutdown of several smelters and prevent thousands of job losses in one of South Africa’s most energy-intensive export industries.

A memorandum of understanding (MoU) signed with Glencore-Merafe Chrome Venture and Samancor Chrome will see the parties attempt to agree on a new, more competitive electricity tariff after years of steep price increases.

The ferrochrome industry, a significant contributor to the global stainless-steel supply and one of South Africa’s major mineral exports has repeatedly warned it cannot survive Eskom’s runaway electricity tariffs. Prices have risen more than 900% over the past 18 years, rendering several plants uneconomical and prompting a wave of shutdowns.

Glencore-Merafe and Samancor had already issued Section 189 retrenchment notices affecting nearly 5000 workers. These notices were due to become binding on 9 December, putting more than 3000 jobs at immediate risk before the MoU temporarily halted the process.

Speaking to Stephen Grootes on The Money Show, Japie Fullard, CEO of Glencore Alloys says the signing of the MoU is a move in the right direction.

"We will now work with Eskom; we will work with government and try and find solutions. There are definitely possible solutions out there," said Fullard.

"We've got zero out of twenty-two furnaces now running. Zero. So we are just exporting all the ore, so for us to be able to make it work, we need cheap electricity. Unfortunately electricity constitutes between 30-40% of our operating costs."

"We've talked about a 900% (electricity price) increase since 2008, so it's impossible to smelt economically in South Africa, and for that reason we need a solution," added Fullard.

Scroll to the top of the article to listen to the full interview.