Electricity and Energy Minister Kgosientsho Ramokgopa has confirmed that government is finalising an electricity package for the ferrochrome sector that goes beyond the negotiated pricing agreement (NPA) framework available to other electricity-intensive enterprises.

Speaking during a briefing on September 26, Ramokgopa said the industry had raised the negative impact that high electricity tariffs were having on the viability of the smelters, and that he had, thus, secured Cabinet approval to enter into negotiations with the industry alongside Eskom.

Such approval was required, he said, because the intervention involved “significant concessions” outside the parameters of the NPA framework approved by the National Energy Regulator of South Africa.

That framework arises from a government policy decision to provide qualifying companies with an incentivised tariff, paid for by standard tariff customers. Applicants for the incentive must prove that electricity is a significant driver of their operating costs and that they are consuming a minimum of 80 GWh yearly at a load factor of greater than 70%.

As part of the discussions with the ferrochrome sector, feedback had also been received on what level of electricity the ferrochrome companies would require to sustain those smelters that remained open, as well as to potentially resume production at those that had been mothballed.

The figure had been measured against Eskom’s capacity to deliver for a sustained period of at least five years. This, Ramokgopa said had been bolstered materially by recent improvements to the energy availability factor of the coal fleet, even quipping that “we are leaving megawatts on the floor” currently.

Before announcing the package, the Minister intended meeting with other energy-intensive subsectors to explain why the ferrochrome sector was being prioritised.

The Minister had also met with the National Union of Mineworkers, the National Union of Metalworkers of South Africa and Solidarity, whose members had been issued with Section 189 retrenchment notices by some of the smelters.

He indicated that priority was being given to salvaging jobs at the smelters, and promised to share the details of the package with the unions once an agreement had been reached and approvals had been received.

“We are going to protect and save the South African economy,” Ramokgopa averred.

No timeframe was provided for the announcement of the package, but the Minister indicated that a briefing would be called once it was finalised.