Glencore-Merafe venture withdraws Section 189 process
The Glencore-Merafe Chrome Venture has withdrawn a Section 189 process following the approval of a proposed discounted tariff for South African ferrochrome producers by the National Energy Regulator of South Africa (Nersa).
Power utility Eskom in April applied to Nersa to implement a 62c/kWh tariff for the ferrochrome smelters. Following public consultations, including public hearings on May 25, the regulator made its decision regarding amendments to Eskom’s negotiated pricing agreements (NPAs) with the smelters on May 29.
Nersa points out that it approved amendments to Eskom’s NPA with Samancor Chrome for five years and to Eskom’s NPA with Glencore-Merafe for three years.
Eskom is required to submit to Nersa progress reports on the amendments to the NPAs every six months to enable the regulator to monitor the implementation, effectiveness and socioeconomic impact of the agreements.
Glencore-Merafe says discussions with Eskom are ongoing to finalise the detailed terms and conditions of its NPA to give effect to the proposed tariff.
These terms remain critical in determining the commercial viability and long-term sustainability of the tariff solution, the venture states.
In a statement, the venture highlights that the withdrawal of the Section 189 process, which may have resulted in the retrenchment of employees, marks a further step towards stabilising operations and progressing the phased restart of the business.
It also acknowledged the significant role of Eskom, the Department of Electricity and Energy, Nersa, the venture’s recognised labour unions and its other stakeholders in the process.
“The venture remains committed to constructive engagement with Eskom and all stakeholders to work to conclude the discussions with Eskom and ensure a sustainable future for ferrochrome production in South Africa,” it states.
Meanwhile, Nersa has also approved a temporary amendment to Eskom’s NPA take-or-pay (TOP) terms with Transalloys’ Manganese Ferroalloys smelter operations, in Mpumalanga, for six months.
The amendment provides for the relaxation of the TOP requirement of 70% for six months, effective from July 1.
Eskom will be required to submit progress reports on the implementation of the TOP waiver three months after the effective date and thereafter every three months until the end of the relaxation period to enable the regulator to monitor the implementation of the waiver of the TOP requirement.
Nersa says the extension of the TOP is necessary to prevent the permanent closure of Transalloys’ smelters and the associated loss of employment and industrial activity.