Eskom has asked the National Energy Regulator of South Africa (Nersa) to grant Transalloys, the country\u2019s last remaining manganese smelter, temporary tariff relief.<\/p>\n
This comes as authorities continue a piecemeal approach to shielding intensive energy users<\/a> from the broken energy pricing framework that has hollowed out the country\u2019s industrial base.<\/p>\n Transalloys\u2019 R5bn plant in Mpumalanga is in peril, weighed down by hefty electricity prices and with the jobs of hundreds of direct employees and subcontractors on the line, with similar difficulties playing out in the ferrochrome and other industries.<\/p>\n Eskom has now asked the regulator for a temporary amendment to the negotiated pricing agreement (NPA) take-or-pay (TOP) terms applicable to Transalloys\u2019 manganese ferroalloys smelter for six months. <\/p>\n The amendment Eskom is seeking relates to the requirement that Transalloys consume a minimum amount of electricity per quarter. If its consumption falls below that threshold, it remains liable to Eskom for payment based on the minimum, regardless of market conditions.<\/p>\n In effect, Eskom requests that the TOP requirement of 70% be temporarily relaxed to give the company a chance to survive.<\/p>\n \u201cDespite expectations that conditions would improve during the implementation of the NPA, the situation has instead deteriorated, leaving the company with depleted cash reserves after operating at negative margins for the past three years,\u201d Nersa <\/a>said in a public consultation document, published last week. <\/p>\n \u201cThe high electricity costs have rendered Transalloys uncompetitive, leading to a significant build-up of unsold stock whenever the plant operates at full capacity. In December 2025, Transalloys suspended three of its furnaces, reducing its operational capacity to approximately 57%.<\/p>\n \u201cThis decision was driven by unsustainable electricity costs and persistent financial losses over the previous three years. A temporary relaxation or waiver of the TOP condition has therefore been proposed to prevent a total shutdown of operations. <\/p>\n \u201cThere is a risk that Transalloys may terminate the current NPA, which could result in permanent loss of jobs and reduced electricity sales to Eskom.\u201d<\/p>\n Despite expectations that conditions would improve during the implementation of the NPA, the situation has instead deteriorated, leaving the company with depleted cash reserves after operating at negative margins for the past three years. <\/p>\n \u2014 \u00a0Nersa <\/p>\n The challenges facing Transalloys illustrate how far the sector has fallen behind. In the early 2000s, South Africa was home to several smelters with a capacity to churn out about 850,000 tonnes of manganese alloys annually. <\/p>\n Now, Transalloys is the only player still standing, with the capacity to produce about 160,000 tonnes annually. This is despite South Africa being home to more than 75% of the world\u2019s identified manganese ore reserves, ceding the advantage to other players and hurting the industry\u2019s beneficiation efforts.<\/p>\n \u201cTransalloys is a major producer of manganese ferroalloys on the African continent, accounting for about 80% of the world\u2019s high-grade manganese ore reserves,\u201d Nersa said.<\/p>\n \u201cThe Transalloys smelter benefits the South African economy by directly employing 282 people and 301 subcontractors and supporting additional indirect jobs. Transalloys produces 104 ktpa [kilotonnes per annum] of manganese ferroalloy products and supplies the local market and exports to international markets. Beneficiation is from South African manganese ore deposits.\u201d<\/p>\n Transalloys\u2019 predicaments reveal the soft underbelly of the NPAs Eskom enters into with its large customers, with the power producer increasingly forced to return to Nersa to ask for further relief, as it has in the case of ArcelorMittal South Africa and the Glencore and Merafe venture.<\/p>\n Workers in the Glencore-Merafe Chrome Venture <\/a>will wait with bated breath this week for the outcomes of Eskom\u2019s decision on the impasse in ferrochrome tariff discounts entering a crucial period, with job losses still very much on the cards.<\/p>\n The joint venture said last week that while the proposed 62c\/kWh tariff has been approved in principle, the process has now moved to finalising the associated terms and conditions \u201cto ensure that the commercial arrangements are workable, financially sustainable and operationally viable for both Eskom and the venture\u201d.<\/p>\n Business Day understands that Eskom held a board meeting two weeks ago to discuss the issue. The successful conclusion of the discussions will cut the cost of electricity they have been using to smelt raw chromite ore into a processed, beneficiated export by more than half.<\/p>\n The venture said it was awaiting internal governance approvals, with the power producer having asked for a one-week extension to conclude its processes \u2014 extending the retrenchment process to Tuesday. <\/p>\n The power utility has already granted the sector a hefty 54% electricity tariff reduction as part of a broader smelter support package announced in February.<\/p>\n