Major miner to meet Electricity Minister as rising power prices threaten ferrochrome industry

On The Money Show, Motheo Khoaripe (in for Stephen Grootes) is joined by Donald MacKay, founder and CEO of XA Global Trade Advisors, to discuss the crisis.

Mining giant Glencore is set to meet with Electricity Minister Kgosientsho Ramokgopa this week, as surging electricity prices threaten closure of its ferrochrome smelters.

As Bloomberg News reports, the industry makes a key stainless-steel ingredient and this development could alter supply chains to the US and other nations.

These ferrochrome smelters are run by a Glencore Plc venture and Samancor Chrome. Currently, none of Glencore's 22 furnaces are operating and just three of Samancor’s 24 are still running.

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This is threatening thousands of jobs in the mining, as well as related industries.

Glencore Alloys CEO Japie Fullard is scheduled to meet the Minister on Friday to discuss possible solutions.

This conversation is extremely important, comments XA Global Trade Advisors' Donald MacKay.

As he puts it, Glencore is just at the sharp end of what is a much bigger problem.

"In the bigger picture, all of our energy-intensive sectors in manufacturing are at risk because of the situation with Eskom."

Donald MacKay, CEO - XA Global Trade Advisors

Perhaps a solution does exist for Glencore, MacKay speculates, but what then about everyone else?

"Glencore is perhaps the first in line, but there's a long list of companies in a similar position. On top of this, if government wants to execute on this strategy of beneficiation, this is a problem  that has to be solved - and it can't be solved by, for example saying 'we're just going to impose export duties or restrictions on the mined products'."

Donald MacKay, CEO - XA Global Trade Advisors

"We've got to fix the problem at source, and much of that lies with Eskom."

Donald MacKay, CEO - XA Global Trade Advisors