Eskom has introduced a temporary tariff intervention of 87.74c/kWh in January 2026, aimed at supporting the struggling ferrochrome sector in South Africa. This relief measure is set for a duration of 12 months and is crucial as the industry faces unprecedented challenges due to soaring electricity costs.
In a related agreement, Eskom and Glencore-Merafe have settled on a temporary relief tariff of 62c/kWh, contingent on specific conditions. This proposed tariff is essential for preventing mass job losses in the ferrochrome sector, where energy expenses account for more than 50% of production costs.
Transalloys, South Africa’s last remaining manganese smelter, directly employs 282 individuals and relies on a stable electricity supply to maintain operations. However, the company has issued Section 189 notices, placing 600 direct jobs at immediate risk if the tariff relief is not implemented.
Ferrochrome production has significantly declined, dropping 63% in 2025 to just 112,000 metric tons. This downturn is exacerbated by the fact that electricity tariffs for large industrial users in South Africa have surged by more than 900% since 2008, undermining the competitive advantage that the metallurgical sector once enjoyed.
Eskom has requested a temporary amendment to the negotiated pricing agreement for Transalloys for six months, indicating the urgency of the situation. According to Marco Levi, CEO of Ferroglobe South Africa, “Unless the proposed 62c/kWh tariff relief is explicitly extended to its operations, the company will have no alternative but to permanently cease operations at all facilities.”
Merel van der Lei, CEO of Wyzetalk, emphasized the necessity of the proposed tariff, stating, “The proposed 62 cents per kilowatt-hour tariff for South Africa’s struggling ferrochrome smelters is a necessary emergency intervention to prevent mass job losses.”
Despite these measures, the manganese sector has been notably excluded from the tariff relief framework, raising concerns about regulatory inconsistencies within the country’s industrial policy.
Currently, Eskom’s average standard cost of supply ranges between R1.96 and R2.20 per kWh, while the cost per kWh for Transalloys on the standard industrial grid is R2.06. The financial implications of these tariffs are significant, with a R5 billion cost associated with the Transalloys plant.
As the situation evolves, details remain unconfirmed regarding the final approval of the 62c/kWh tariff by NERSA. The long-term sustainability of the ferrochrome and manganese sectors remains uncertain, with observers closely monitoring developments.
