Century-Old South African Smelter Nears Closure Over Power Price, Risking 350 Jobs
South Africa · ENERGY
Key Facts
—Jobs at risk: About 350 jobs are threatened at a century-old smelter, according to a News24 report on 10 August 2026.
—Power price surge: Electricity tariffs for South African smelters have risen more than 900 percent since 2008, Reuters reported.
—Viability threshold: Industry says a tariff of about 62 South African cents (roughly US$0.04) per kilowatt-hour is needed for smelting operations to remain viable.
—Subsidy estimate:
—Glencore’s wider exposure: Earlier in 2026, Reuters reported that about 1,500 direct jobs were at stake across Glencore’s South African smelters before a deal was reached.
—Regional pattern: Mozambique’s Mozal aluminium smelter was placed on care and maintenance after failing to secure competitively priced power, showing the crisis extends beyond South Africa.
A century-old South African smelter is nearing closure because electricity prices have made operations unviable, putting about 350 jobs at risk and exposing the deepening collision between industrial survival and utility finances in Africa’s most industrialised economy.
A power-price reckoning decades in the making
News24 reported on 10 August 2026 that the century-old facility is on the brink of shutting down because it cannot absorb electricity tariffs that have spiralled upward for nearly two decades. The immediate trigger is not a shortage of megawatts but a tariff gap: what state utility Eskom charges versus what smelters can pay while still competing globally.
Reuters has documented that South African power prices for smelters have jumped more than 900 percent since 2008. That relentless climb has transformed electricity from a predictable input cost into an existential threat for energy-intensive industries that once anchored the country’s manufacturing base.
The smelter in question is part of a ferrochrome processing complex with deep roots in South Africa’s industrial history. While the News24 snippet does not name the exact plant, the broader pattern is unmistakable: older, power-hungry facilities are being squeezed out unless the state steps in with tariff relief or direct subsidies.
Glencore, Merafe and the rescue dance
Glencore, through its South African ferrochrome division and the Glencore-Merafe Chrome Venture, sits at the centre of this story. Earlier in 2026, Reuters reported that about 1,500 direct jobs were at stake across Glencore’s South African smelters if no cheaper power solution was found.
The saga has lurched through multiple rescue attempts. In January 2026, the National Energy Regulator of South Africa (Nersa) weighed temporary tariff relief for ferrochrome producers. By February, a smelter had restarted after that relief was granted, only for Glencore to threaten to walk away from rescue talks in March over conditions attached to the deal.
Reuters then reported on 1 June 2026 that Glencore withdrew planned job cuts after an electricity deal was finally struck. The August News24 report suggests that reprieve was partial or temporary, and that at least one facility is again facing closure, with about 350 jobs now on the line.
The numbers that decide a plant’s fate
Industry players have told government that a tariff of roughly 62 cents per kilowatt-hour is the ceiling for viable smelting operations. An earlier interim arrangement set a temporary tariff of 87 cents per kilowatt-hour, which operators still described as too high for a full restart or sustainable running.
Bridging that gap is expensive. Electricity and Energy Minister Kgosientsho Ramokgopa has publicly discussed restructuring power costs for smelters, signalling that Pretoria views these plants as strategic assets rather than ordinary private businesses.
The stakes go beyond a single facility. A 2022 academic review published in SciELO notes that mining and processing consume roughly 14 to 30 percent of South Africa’s total energy, with about 40 percent of that mining energy used by the platinum group metals sector alone.
Why a South African smelter closure echoes globally
South Africa is the world’s largest platinum producer, at around 70 percent of global output, and its ferrochrome output feeds stainless-steel mills across Asia, Europe and the Americas. A prolonged smelter shutdown therefore ripples far beyond the town where the plant sits, tightening supply chains for manufacturers that depend on South African processed minerals.
The pressure also comes from international competition. Reporting has noted that South African smelters are struggling against cheaper producers, including Chinese competitors, which weakens the economics of domestic beneficiation. Beneficiation is the policy of processing raw minerals inside South Africa to capture more value, and it collapses when local power costs make processing uncompetitive.
Mozambique’s Mozal aluminium smelter offers a stark regional parallel. It was placed on care and maintenance because it could not secure competitively priced power, confirming that this is a Southern African industrial emergency, not a single-country problem. The great-power contest for critical minerals, explored in our pillar Africa: The New Scramble, adds another layer: when smelters close, processing shifts elsewhere, often to countries with cheaper coal or state-subsidised electricity.
Eskom, load shedding and the wider industrial squeeze
The smelter crisis sits inside a broader story of Eskom fragility and deindustrialisation. Load shedding has been a feature of South African life for years, and mining output has fallen sharply during blackout periods, according to BusinessTech and Voice of America reporting.
The problem is not only about generation capacity. Companies face a triple squeeze of high power tariffs, rising network costs, and logistics bottlenecks, including rail inefficiencies, that make local processing less competitive at every step. Some firms have responded by moving plants to care-and-maintenance status rather than absorbing higher electricity bills.
The Transalloys manganese smelter, reported by Reuters in December 2025 as South Africa’s last operating manganese smelter, shows the same cost-pressure pattern. Each closure chips away at the country’s ambition to be more than a raw-ore exporter.
What to watch as the deadline approaches
The August 2026 News24 report suggests a decision point is imminent for the century-old smelter and its workforce of about 350 people. Minister Ramokgopa’s willingness to discuss subsidies indicates the government is searching for a formula that keeps the plant open without blowing a hole in Eskom’s already strained balance sheet.
The pattern of 2026 so far, where Glencore withdrew job cuts in June only for a fresh closure threat to emerge in August, suggests stop-start crisis management rather than a durable fix. Investors and trading partners will watch whether Pretoria can move from emergency tariff relief to a predictable power-pricing framework that makes energy-intensive processing viable over the long term.
If the closure proceeds, it will test the government’s industrial policy resolve and add to unemployment in a country where mining and processing jobs remain politically sensitive. If a last-minute deal is struck, the question will be whether it is another temporary patch or the beginning of a structural solution for a sector that has been warning about power costs for more than a decade.
Frequently Asked Questions
Why is the century-old South African smelter closing?
The smelter is nearing closure because electricity tariffs have risen more than 900 percent since 2008, making operations unviable despite temporary tariff relief earlier in 2026.
How many jobs are at risk at the smelter?
About 350 jobs are directly at risk, according to a News24 report published on 10 August 2026.
What electricity price do South African smelters need to stay viable?
Industry says a tariff of about 62 South African cents (roughly US$0.04) per kilowatt-hour is needed, while an earlier interim rate of 87 cents per kilowatt-hour was still considered too high for sustainable operation.
Connected Coverage
Read more about how energy, minerals and great-power competition are reshaping the continent in our pillar Africa: The New Scramble.
Sources
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