The National Transmission Company South Africa (NTCSA) reports that it remains open to finding a solution for the Mozal aluminium smelter. But it also insists that any new electricity supply agreement with the Mozambican facility should safeguard its financial stability and protect South African electricity consumers from unintended costs.

In a statement following an announcement by South32 that Mozal would be placed into care and maintenance when a 20-year electricity deal expired on March 15, the Eskom Holdings subsidiary indicated that Mozal required an electricity price that was “significantly lower than the direct cost of supply”.

CEO Monde Bala said such an arrangement was not sustainable for the NTCSA, while also noting that the Negotiated Price Agreement (NPA) policy mechanism, which allows electricity intensive companies to apply to the regulator for discounted tariffs, did not extend beyond South Africa’s borders.

“As such, a mutually beneficial solution, developed collaboratively with stakeholders in both Mozambique and South Africa, is essential to support regional industrial activity, while ensuring the NTCSA’s financial sustainability and fairness to South African electricity consumers,” Bala added.

Nevertheless, he also said the NTCSA remained available to find an “appropriate price range for the supply of electricity to secure a new supply agreement with our valued customer”.

On December 16, South32 CEO Graham Kerr indicated that the parties remained deadlocked on an appropriate electricity price, and that its attention had thus turned to safely placing the smelter on care and maintenance from March 2026.

The Mozal announcement comes amid moves in South Africa to salvage ferrochrome smelting capacity at risk of closure as a result of electricity prices that have surged over the past decade and a half.

Electricity and Energy Minister Dr Kgosientsho Ramokgopa indicated on December 15  that negotiations were under way in a bid to find a way to deliver electricity at a “sweet spot” of between 60c/kWh and 70c/kWh.

This, after Glencore-Merafe Chrome Venture and Samancor Chrome, which had both initiated retrenchment processes at some of their operations, rejected an offer of 87c/kWh and indicated that the current NPA price of 135c/kWh had made the South African smelters uncompetitive with those in China, despite the price being well below the normal tariff of 212c/kWh.

Moneyweb reports that Ramokgopa had stated that the deal could cost R5.2-billion to implement, but did not indicate how it would be funded.

On December 8,  Eskom signed a memorandum of understanding (MoU) with Samancor Chrome and the Glencore–Merafe Chrome Venture in a bid to finalise an electricity tariff solution that prevented the closure of additional smelting capacity and averted the threat of widespread job cuts in the sector.

Under the MoU, the companies have set a deadline of February 28, 2026, for reaching a pricing agreement.

It is understood that there is a proposal to set up an entity that buys low-cost coal to be used by some Eskom power stations, which will pass on the pricing benefits to the ferrochrome smelters in the form of discounted tariffs.

The idea is to use the lower tariffs to revive domestic smelting without burdening the rest of Eskom’s standard-tariff customers, which have hitherto absorbed the costs of NPAs.