Merafe to close two South Africa ferro-chrome smelters after tariff talks stall

Merafe Resources

Merafe to close two South Africa ferro-chrome smelters after talks with the government failed to deliver relief. Merafe Resources will place the Wonderkop and Boshoek smelters on care and maintenance. Merafe to close two South Africa ferro-chrome smelters because power costs and weak demand crushed competitiveness. Therefore, the decision raises fresh concerns about jobs and industrial capacity.

Glencore runs the assets through a joint venture with Merafe. The venture suspended operations at Wonderkop and Boshoek in May after a February competitiveness review. Meanwhile, low ferro-chrome prices and soft demand reduced margins. As a result, high electricity tariffs became the dominant constraint.

Electricity tariff disputes drive shutdown risk and potential job cuts

South Africa introduced a tariff realignment programme in October 2024. Cyril Ramaphosa announced the programme to ease pressure on industrial users. However, Merafe said tariff talks produced no agreement on its most urgent need. Therefore, Merafe to close two South Africa ferro-chrome smelters while it continues discussions.

The venture warned that job cuts could follow within weeks. It expects further government feedback but needs immediate clarity. Meanwhile, labour outcomes will depend on whether tariffs change quickly. As a result, the smelter closure timeline is now a political and economic flashpoint.

ferro-chrome

Chinese competition and weak European steel demand squeeze ferro-chrome margins

Merafe cited a structural squeeze across the value chain. Cheap Chinese ferro-chrome and high local power costs undermine South African production. Meanwhile, weak demand from the European steel industry reduces pricing support. Therefore, profitability has deteriorated across multiple plants.

The company produced 110,000 tonnes of ferro-chrome in the third quarter. That output fell 51% year on year. The new shutdowns follow earlier closures at Lydenburg in 2020 and Rustenburg in 2024. As a result, Merafe to close two South Africa ferro-chrome smelters as part of a multi-year contraction.

The 720,000 t/yr Lion smelter will remain the only operational plant owned by the venture. Operations at Lion paused in June for scheduled maintenance. It is expected to restart, but the venture has not confirmed the restart date. Therefore, near-term supply will hinge on Lion’s restart timing and power cost stability.

The Metalnomist Commentary

Ferro-chrome smelters live or die on electricity pricing and uptime. Meanwhile, repeated closures risk eroding skills and maintenance integrity across the fleet. Therefore, South Africa must align tariff policy with export competitiveness or accept further capacity loss.