Electricity remains key risk for ferrochrome smelters
Electricity supply and pricing remain key risks for our business and the broader ferro alloy sectors. The electricity tariff increased by 8.8% effective 1 April 2020. For 2021, the National Electricity Regulator of South Africa (NERSA) has agreed to increase the tariff by 15.6%, following Eskom’s High Court victory, where it challenged the inclusion of the government bailout of R69 billion in the calculation determining tariff increases.
These increases add to cost pressures of the Merafe-Glencore Venture’s smelters and further reduce the cost competitiveness of the South African ferrochrome industry.
The section 189 consultation process which commenced in the second quarter of 2020 across all operations, has been concluded. It has resulted in 976 employees being retrenched at a cost of R474.2 million.
The Process was triggered by deteriorating operating and market conditions across the South African ferrochrome industry, including unsustainable electricity tariffs and interruptions, cross subsidies and real cost inflation.