This article first appeared on GuruFocus .
Glencore (GLEN) is edging closer to a potential restart of its South African ferrochrome operations after its joint venture with Merafe Resources provisionally accepted a lower electricity tariff, a development that could ease one of the sector's most persistent cost pressures. The venture has been in discussions with Eskom Holdings over a power supply agreement priced at 62 cents ($0.03) per kilowatt hour, with revised terms and conditions now communicated by Eskom's board and conditionally agreed to, according to the company's statement.
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Management described the progress as significant and positive, though final acceptance still depends on approvals from Samancor Chrome and the National Electricity Regulator of South Africa. Eskom indicated the proposed structure could serve as a medium-term arrangement of up to five years, allowing for pricing and contractual flexibility tailored to the commercial realities of individual smelters. That flexibility could be an important lever as operators assess whether previously idled capacity can return to production under more sustainable cost conditions.
The backdrop remains challenging, with South Africa retaining its position as the world's largest producer of chrome ore while its ferrochrome processing industry has been under pressure from rising electricity costs and competition from China. Four of the five smelting complexes within the Glencore-led venture are currently not operational, underscoring the scale of disruption. The joint venture has urged regulators to treat the approval process as urgent and complete it within 30 days, while extending a deadline for potential job cuts to May 11 as negotiations continue.
