What's Happening?
Merafe Resources has reported a significant 63% decrease in ferrochrome output from the Glencore-Merafe Chrome Venture for the year 2025 compared to 2024. The production fell from 301,000 tons in 2024 to 112,000 tons in 2025, with a notably low output of
147 tons in the last quarter of 2025. This decline is attributed to the suspension of smelter production due to adverse market conditions. Despite the drop in ferrochrome production, Merafe's chrome-ore production saw a slight decrease of 2% in the fourth quarter, totaling 932,000 tons for the year. Additionally, the venture's platinum group metals (PGMs) concentrate production increased by 5% in the fourth quarter. The South African private-sector ferrochrome industry continues to face challenges due to high electricity tariffs, prompting discussions with Eskom for a tariff solution to support operations.
Why It's Important?
The decline in ferrochrome production highlights the ongoing struggles within South Africa's ferrochrome industry, primarily due to high electricity costs. This situation poses a threat to the economic viability of smelters, potentially leading to job losses and reduced industrial activity. The industry's reliance on beneficiation, which adds significant value to chrome ore, is at risk if smelters continue to close. The discussions with Eskom for a more favorable electricity tariff are crucial to maintaining competitiveness and preventing further closures. The outcome of these negotiations could have significant implications for the industry, affecting employment, revenue generation, and the broader economic landscape in South Africa.
What's Next?
Efforts are underway to secure a more sustainable electricity tariff from Eskom, which could help stabilize the ferrochrome industry. The potential inclusion of smelters in special economic zones and the elimination of illegal chrome mining are also being considered to enhance competitiveness. The adoption of new technologies, such as SmeltDirect, which reduces power needs by 70%, could be pursued if industry conditions improve. Trade unions, like Solidarity, are optimistic about reaching a beneficial agreement for all stakeholders, which could prevent further job losses and support the industry's long-term viability.
Beyond the Headlines
The challenges faced by the ferrochrome industry underscore broader issues related to energy policy and industrial strategy in South Africa. The high cost of electricity not only affects the ferrochrome sector but also other energy-intensive industries, highlighting the need for comprehensive energy reforms. Additionally, the illegal mining of chrome ore, which accounts for a significant portion of exports, poses legal and regulatory challenges that need to be addressed to ensure fair competition and industry sustainability.
