Zanele Matlala

FERROCHROME smelters are power-hungry beasts. So above-inflation price increases from Eskom, South Africa’s state-owned power utility, spell bad news for Merafe Resources — a 20.5% shareholder in the Glencore-Merafe Chrome Venture, the country’s largest producer of the steel-feed metal. That is why a deal agreed in November between Matlala’s Merafe and Pele Green Energy to build a R2.1bn utility-scale renewable energy plant is a major plus. 

The 100MW solar plant will be built at the joint venture’s Free State province smelters. Merafe’s power concerns were also somewhat allayed in early 2024 when Eskom extended a Negotiated Pricing Agreement (NPA) to the company. One benefit of an NPA is to create price stability by taking out issues such as the winter tariff. Nonetheless, Merafe and Glencore are investigating a gas co-generation project to supplement the solar plant. Eskom applied for an 11.8% price hike for 2026 on top of 36.1% for 2025. This comes amid a softer market for ferrochrome despite real growth in world stainless steel production, especially in China, which sources 80% of its chrome from South Africa. 

At the time of writing, the production run-rate of the joint venture’s smelters was about 1.2 million tons of which Merafe’s share is about 240,000t — a significant year-on-year reduction. Merafe is a well-capitalised business that rarely strays out of its lines on orders from Glencore, whose executive Japie Fullard keeps a close eye and tackles the operational questions when Merafe presents its twice-yearly results.