Glencore Merafe Ferro-Chrome Restart Could Pressure Global Prices

Glencore

Glencore Merafe ferro-chrome restart will bring the Boshoek and Wonderkop smelters back into production after the venture finalised a three-year electricity pricing agreement with South African utility Eskom.

Glencore Merafe ferro-chrome restart is supported by a negotiated power tariff of 62 South African cents/kWh, sharply below the 87.44¢/kWh level at the start of 2026 and 135.82¢/kWh at the end of 2025.

Glencore Merafe ferro-chrome restart is significant because the two smelters were suspended in May 2025 as high electricity costs and weak market conditions made operations uneconomic.

The return of substantial South African charge chrome supply could alter global ferro-chrome trade flows and put downward pressure on prices in China and Europe.

Lower Power Costs Restore South African Smelting Economics

Electricity is one of the largest costs in ferro-chrome production because smelters rely on energy-intensive submerged arc furnaces.

The new 62¢/kWh tariff is around the breakeven level required for Glencore Merafe's operations, giving Boshoek and Wonderkop a viable route back into production.

The agreement followed lengthy negotiations involving Eskom, South Africa's energy regulator Nersa, the national government and labour unions.

The production impact could be substantial. Glencore Merafe's ferro-chrome output fell by 63% year on year in 2025 after the two smelters were shut.

Merafe's share of venture output fell to only 3,000t in the first quarter, highlighting how strongly the closures affected supply.

Restarting the two facilities therefore restores meaningful capacity to a market that had adjusted to reduced South African availability.

The agreement also shows how industrial electricity policy can determine whether energy-intensive metals capacity remains competitive. South Africa has abundant chrome ore resources, but high power costs have increasingly undermined its ability to convert those resources into ferro-chrome domestically.

Return of South African Supply Could Pressure China and Europe

Reduced South African production helped support charge chrome prices during 2025.

Chinese import prices for South African 50-55% charge chrome rose by 14% during the year as availability tightened. Imports from South Africa subsequently fell sharply, allowing Kazakhstan to overtake the country as China's largest ferro-chrome supplier.

The restart could begin reversing that shift if South African material returns to the Chinese market at competitive prices.

Europe could face a similar adjustment. Buyers increased purchases from alternative suppliers after South African volumes collapsed, including higher imports from Finland.

However, alternative European supply cannot fully replace South African charge chrome volumes, particularly at comparable pricing.

A significant return of Boshoek and Wonderkop production could therefore increase competition and weaken European prices from current levels.

The longer-term implication is also important for South Africa's chrome industry. If negotiated electricity tariffs can restore smelting competitiveness, more ore could remain in the country for value-added processing instead of being exported directly.

That would strengthen South Africa's downstream position, but it could also add renewed pressure to an already competitive global ferro-chrome market.

The Metalnomist Commentary

South Africa's ferro-chrome problem has increasingly been an electricity problem rather than a resource problem. The Glencore Merafe restart shows that lower industrial power tariffs can quickly bring idled capacity back, but the resulting supply increase could also put renewed pressure on global ferro-chrome margins.