Eskom board member Clive Le Roux says the State-owned company will be in a better position financially by selling electricity to the ferrochrome smelters at 62c/kWh than if that demand was lost through smelter closures.

“The reason for that is as the demand comes down, so the marginal cost of supplying energy into a lower-demand economy comes at a lower marginal price.

“As that marginal price came down, that got us into a position where we could actually afford to support that price,” Le Roux explained during a briefing on the winter outlook for the electricity system.

“So we are better off as Eskom financially with this deal than we were before; there's no pass-through or recourse to other customers required.

“And on that basis, the board has supported that strategy [of providing strategic support to the ferrochrome industry], and we look forward to more of those to help build the market and create a greater sales revenue for Eskom.”

CEO Dan Marokane said that Glencore Merafe Chrome Venture and Samancor Chrome together represented yearly demand of “between 12 TW and 14 TW at maximum production capacity”.

He said that in a context of more stable supply and lower overall demand, which dropped further last year partly because of lower ferrochrome demand, Eskom could meet a recovery in load from the smelters comfortably.

“A significant portion of their operations, more than 60%, was off and in care and maintenance last year, and you'll see that dip in terms of our sales.

“So this intervention is really bringing that demand back, but it's also an intervention that is crucial to support an industry that is strategic for the country,” Marokane said, adding that it was working on similar tariff offers for other electricity-intensive industries.

“The combined demand of the other smelters is in the vicinity of some 3.6 GW, which is contributed by some seven to eight entities, and all of them are operating in different markets from a product perspective.

“We are looking at how to respond to that . . . [and] after due consideration, we will be able to make some announcements in this area.”

Eskom, which has recovered following a period of extreme loadshedding, says it currently has a surplus of electricity and is looking for new markets for supply that is currently being curtailed.

Acting group executive for distribution Agnes Mlambo reported that it was developing a framework to provide discounted electricity to entities able to ramp up their consumption during periods of excess supply and ramp down when the supply/demand balance tightened.

Mlambo confirmed that there had been discussions with Bitcoin miners on a possible pilot project, but that the framework, which would also be open to existing manufacturing customers, still required regulatory approval.