Energy regulator Nersa has approved an interim discounted power tariff for struggling ferrochrome producers Samancor Chrome and a joint venture between Glencore and Merafe Resources, South African power utility Eskom said on Friday.
A Nersa spokesperson confirmed the tariff at 62c per kilowatt-hour. Last month, Eskom applied for regulatory approval for the discounted tariff. A public hearing was held this week. Eskom said a five-year term for Samancor Chrome and three years for the Glencore-Merafe venture had been agreed on.
South Africa, the world’s biggest chrome ore producer, has lost its position as the top processor of chrome into ferrochrome to China.
High power costs hit smelters
The shift is mainly due to high electricity costs; smelters have been hit by a tenfold increase in power charges since 2008, forcing dozens of plants to close.
Eskom said the framework required no additional government fiscal support and included an equitable upside-sharing arrangement linked to market performance.
“The framework is structured within a regulated environment, includes appropriate risk-sharing mechanisms and does not place additional financial obligations on standard tariff customers,” chief executive Dan Marokane said.
- South Africa's energy regulator Nersa approved a discounted power tariff for ferrochrome producers Samancor Chrome and Glencore-Merafe joint venture.
- The interim tariff is set at 62 cents per kilowatt-hour, with a five-year term for Samancor and three years for Glencore-Merafe.
- High electricity costs have caused South Africa to lose its position as the leading ferrochrome processor to China, with many smelters closing due to a tenfold rise in power charges since 2008.
- Eskom stated the tariff framework requires no extra government funding and includes an upside-sharing mechanism tied to market performance.
- The arrangement is designed to share risk fairly and avoid imposing additional financial burdens on other electricity customers.
