Trade unions UASA and Solidarity have welcomed State-owned power utility Eskom's agreement with ferrochrome producers Glencore-Merafe and Samancor on a 62c/kWh electricity tariff.

Solidarity says the agreement is a significant breakthrough for South Africa’s smelter industry and job security.

The agreement provides much-needed stability in a sector under severe pressure. An estimated 4 000 direct jobs could be saved as a result of the agreement.

Solidarity further hopes that similar agreements can be concluded with other stakeholders across the smelter industry to prevent further job losses and stabilise the sector.

The tariff agreement remains subject to approval by the National Energy Regulator of South Africa (Nersa) and is the result of extensive cooperation between government, industry and organised labour, the union says.

“The impact of the agreement is already noticeable and the fact that an agreement is in place has a direct impact on the looming retrenchments,” says Solidarity deputy secretary-general Willie Venter.

“We hope Glencore-Merafe and Samancor will now halt their retrenchment processes. In a country where unemployment is around 42%, it is critical that every possible job is protected,” he adds.

Further, the agreement also creates operational benefits for smelters by enabling increased production.

“This agreement creates the space for smelters to bring more furnaces back into operation. This means increased production, improved revenue for companies and greater job security for workers,” says Venter.

The agreement is also in Eskom’s interest. If these smelters were to cease production, it would have a direct negative financial impact on Eskom.

“This agreement therefore helps protect both industrial capacity and Eskom’s revenue base,” he says.

Eskom has indicated that the agreement will improve its liquidity and secure predictable sales volumes for up to five years without requiring tariff increases or additional government support, the union reports.

Glencore-Merafe confirmed that the agreement is an important and positive step forward for the sustainability of ferrochrome beneficiation and safeguarding jobs.

“Having reached an agreement is a major win and we are optimistic that Nersa will approve this agreement,” says Venter.

“This agreement proves that when government, employers and trade unions work together, meaningful and positive outcomes can be achieved,” he says.

The retrenchment process has been extended in line with the regulatory timeline, with final implementation dependent on Nersa approval and broader industry alignment, Solidarity says.

UASA
The proposed tariff will make it financially sustainable for the companies to continue operating and compete with other African chrome producers, albeit following months of delays in negotiations between the power supplier and the ferrochrome smelters, UASA says.

While the agreement requires approval from Nersa, UASA says the jobs at these companies will be preserved and that Eskom will be able to maintain viable revenue from the smelters, which are major customers of the utility.

The ferroalloy value chain provides about 300 000 direct and indirect jobs, the union says.

This tariff deal will also help Eskom achieve predictable sales volumes for the next five years, safeguard public investments in the utility and support its capacity to promote reindustrialisation and economic growth, UASA says.

“We hope Nersa will approve this tariff deal, which impacts many livelihoods. We cannot afford to lose any more jobs under circumstances that could be addressed through intervention and solutions involving all parties.

“UASA remains optimistic that this five-year agreement will be viable for everyone involved.”