62 cent power rate to save 11,000 mining jobs
Electricity minister Kgosientsho Ramokgopa has announced a comprehensive electricity tariff framework aimed at stabilising and revitalising South Africa’s struggling ferrochrome industry. The intervention seeks to provide sustainable solutions for an industry severely impacted by rising energy costs and volatile market conditions.
At a media briefing on Friday, Ramagkopa outlined government support for tariff relief measures, including a significant reduction in power costs for major producers. The proposed framework suggests tariffs of approximately 62 cents per kilowatt-hour (kWh) for major smelters, such as Samancor Chrome and the Glencore-Merafe venture. This is a marked decrease from the interim tariff of 87.74 cents per kWh approved by the energy regulator in January 2026, and significantly lower than the R1.35 per kWh previously paid by producers.
Ramokgopa described the intervention as a “game changer” for the economy, noting that the recent operational turnaround at Eskom enabled the government to support energy-intensive industries meaningfully. The intervention follows Section 189 retrenchment processes initiated by major producers who cited unsustainable electricity prices as a primary grievance.
Ramakgopa emphasised that the competitive benchmark of 62 cents per kWh aligns South Africa with international competitors like China. He further clarified that the solution works within the existing fiscal framework and Eskom’s debt relief programme, ensuring that costs are not shifted onto residential consumers. He stated that the government has no intention of socialising this cost and is working strictly within the existing framework.
Restoring Industrial Capacity and Jobs
The impact on employment is expected to be substantial. The Minister noted that while South Africa possesses 66 smelters, only 11 are currently operational. The new framework aims to increase this to 45 operating smelters by December 2026 and 49 by December 2027, representing 74% of national capacity.
This industrial revival is projected to support approximately 11,480 direct jobs and potentially 121,392 total jobs across the broader value chain. The Minister stated that restoring these smelters translates directly into jobs and an injection into the South African economy, allowing families to restore their dignity.
Economic and Fiscal Benefits
The government estimates that the intervention will deliver significant returns, including R76 billion in projected export earnings and R20 billion in additional expenditure on raw minerals for beneficiation. Furthermore, the fiscus is expected to receive R5.5 billion in additional tax revenue, while Eskom could see an additional R17.9 billion in electricity revenue from 24-hour smelter operations.
Ramokgopa stressed that these measures are not subsidies but competitiveness interventions designed to ensure beneficiation occurs at the source. He noted that this aligns with President Cyril Ramaphosa’s mandate to move away from colonial patterns of mineral extraction.
Eskom Board Chairperson, Dr Mteto Nyati, welcomed the announcement as a milestone for industrial growth. He noted that Eskom is fulfilling its dual mandate to remain commercially viable while advancing developmental objectives such as job creation and mineral beneficiation. Nyati concluded that while the utility must manage its financial health, it must also recognise the critical role electricity plays in enabling communities to thrive.
-SAGovNews
