Smelter Crisis: High electricity prices drop Ferrochrome exports 63% as Raw Ore pours out
A stark trend towards structural de-beneficiation is unfolding in South Africa’s metals sector, according to data from the latest TIPS Export Tracker for the fourth quarter of 2025. High domestic electricity tariffs continue to cripple local smelting operations, triggering an effective collapse in the export of high-value ferrochromium, while exports of unrefined, raw chromium ore have hit global highs .
The fourth quarter of 2025 trade data compiled by TIPS paints a troubling picture for domestic industrial policy. South African ferrochrome exports tumbled to just 273 million kg valued at R5.4 billion. This marks a devastating 63% collapse in volume compared to the same period in 2024, and represents a mere fraction (22%) of the decade-high production peaks achieved in early 2021.
The cost of power and tentative tariff relief
The rapid decline is directly tied to the severe operational strains confronting South Africa’s electro-intensive smelting industry [source: 1]. Ferrochrome manufacturing relies on electric arc furnaces to combine iron with chrome ore, but spiralling power costs have rendered local smelting economically unviable compared to global competitors, forcing deep production cuts.
In response to this crisis, significant regulatory and commercial interventions are underway to resuscitate the industry . In January 2026, the National Energy Regulator of South Africa (NERSA) approved an initial electricity price relief framework for ferrochrome smelters at a rate of 87.74 c/kWh . Following this, a major breakthrough occurred in early April 2026 when Eskom concluded a tentative five-year agreement with dominant market operators – including Samancor Chrome and Glencore-Merafe Chrome – for a further reduced negotiated pricing agreement (NPA) rate of 62 c/kWh.
While NERSA is set to make its final determination on this new 62c rate, these developments occurred outside the reporting period for the current TIPS Export Tracker. Consequently, the temporary relief could not prevent the steep export slump witnessed at the end of 2025.
China capitalises on Raw Ore shipments
As local furnaces went cold, global demand for South Africa’s raw chromium reserves expanded. The TIPS Export Tracker highlights that South Africa remains the world’s top producer of chrome ore; however, instead of processing the mineral locally, miners are increasingly diverting unrefined ore directly to overseas markets.
Exports of raw chromium ores and concentrates jumped 35% year-on-year, climbing to 6,863 million kg valued at R27 billion . More than half of this volume went directly to mainland China, which absorbed 4,229 million kg (R16.2 billion) to fuel its own domestic stainless steel industries.
Logistical disruptions also altered traditional shipping routes during the quarter. The TIPS tracker notes that chrome exports routed through the Port of Maputo via Mozambique dropped by 1,384 million kg, with volumes being re-routed through regional trading hubs like Hong Kong, which saw its intake jump from R300 million to R3.7 billion.
SA Trade Desk closing commentary
For the SA Trade Desk community, the divergence between collapsing alloy exports and surging raw ore shipments serves as a case study in the vulnerabilities of unbeneficiated trade. While the export of raw chromium keeps South Africa’s immediate trade balance in the black, it represents a net loss of localized industrial value, jobs, and downstream economic complexity.
The tentative 62c/kWh tariff agreement between Eskom and major smelters is a vital step in the right direction, proving that targeted industrial policy is required to protect domestic value chains. Moving forward, the critical metric for trade strategists will be monitoring how quickly local furnaces fire back up once NERSA finalizes these tariffs, reversing the flow of raw material extraction and reclaiming South Africa’s status as a high-value industrial exporter.
