Lifeline for SA's ferrochrome industry as govt eases rules to cut power costs

Government is intervening in what appears to be the latest attempt to bring South Africa's ferrochrome industry back from the brink.

The Department of Trade, Industry and Competition (dtic) has gazetted amendments to a 2023 block exemption in the Competition Act, to help 'industries in distress' work together to secure alternative power supply.

Surging electricity prices have been cited as the major reason for the closure or mothballing of many of the country's ferrochrome smelters.

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Stephen Grootes gets some insight from Saul Levin, executive director of the economic research institution 'Trade & Industrial Policy Strategies' (TIPS).

Levin details how a once-leading industry and major exporter of processed minerals has been impacted by energy costs, comparing this to what is happening in China, where electricity for the industry is subsidised.

"We mined the chrome ore, would turn it into ferrochrome and then export, with some staying behind to get turned into stainless steel. And largely because of the price of electricity we've seen SA lose its advantage on the global stage - and now we export our chrome ore. It goes to China and they turn it into ferrochrome, then stainless steel and then on to a range of other products."

Levin points out that some of South Africa's smelters are in the process of closing and can be brought back into operation in more beneficial circumstances, as signalled by the amendments to the block exemption.

"What we're looking at is setting up a company that would be an independent power producer working with Eskom to produce electricity... It will allow the smelters to work with the utility and not prejudice other users... And it doesn't need to be as cheap as China because we've got the chrome ore and then don't need to ship vast amounts of it across the planet."

The amendments will enable collaboration in:

• securing backup or alternative energy supply, or

• reducing energy costs, or
• promoting optimal, efficient energy use, or
• sharing sites, infrastructure equipment and facilities.

Scroll up to the audio player to hear more from Levin