What's Happening?
Transalloys, a manganese ferroalloy producer based in Mpumalanga, is urging for electricity tariff relief to be extended to the entire ferroalloys sector. The company has expressed concerns that without such relief, it may be forced to shut down operations,
which would result in the retrenchment of approximately 600 employees and affect around 7,000 livelihoods. The company operates a R5-billion plant and highlights the risk of losing significant manganese beneficiation capacity in South Africa, a country that holds about 80% of the world's known manganese resources. Currently, some ferrochrome smelters have received tariff relief, reducing their interim tariff to 87c/kWh, with discussions ongoing to lower it further to 62c/kWh. Transalloys CEO Konstantin Sadovnik emphasizes the need for similar relief for manganese smelting, which is about 30% more energy-intensive than ferrochrome smelting.
Why It's Important?
The potential closure of Transalloys' operations underscores the broader challenges faced by energy-intensive industries in South Africa, particularly in the context of high electricity costs. The ferroalloys sector is crucial for the country's economy, contributing to export earnings, tax revenue, and employment. Extending tariff relief could help preserve these economic benefits and maintain South Africa's competitive edge in the global manganese market. The situation also highlights the need for comprehensive electricity pricing reform to support industrial sectors and attract investment, which is vital for economic stability and growth.
What's Next?
Finance Minister Enoch Godongwana is expected to release the 2026 Budget on February 25, which may address the issue of electricity tariff relief for the ferroalloys sector. The outcome of these discussions will be critical for Transalloys and other similar companies, as it will determine their operational viability and impact on employment. Stakeholders in the industry will be closely monitoring the budget announcement for any indications of policy changes or support measures.
