MBABANE – South African electricity tariffs have forced Maloma Colliery Limited to retrench its operations as 14 smelters shut down their plants in the neighbouring republic.
The smelters shut down their operations due to the high electricity tariffs that they claim have made it impossible to operate their businesses.
This has lessened the demand for coal as there are minimal clients to supply and forcing the country’s leader in anthracite coal mining to remodel its business.
Maloma Colliery Limited’s clientele entails smelters who need the coal for two main purposes: Providing heat and acting as a reducing agent.
Coal is burnt to generate the high temperatures necessary to melt the ore and it also provides the carbon monoxide that strips oxygen from the iron ore, leaving behind usable iron.
Given that their operations are suspended, Maloma Colliery Limited’s Chief Executive Officer (CEO) Jabulile Shabangu said what has affected their South African market is the increase in electricity costs and the introduction of an export tax.
Shabangu said the high electricity costs are severely impacting South Africa’s smelters, making them uncompetitive and leading to production cuts, smelter closures and increased export of raw materials.
She said this follows that electricity is a major input cost for them (smelters) and the recent price hikes have eroded profit margins and threatened the viability of these energy-intensive operations.
In fact, Shabangu’s assertions align with a report by Reuters, an international news agency, which reported on July 3, 2025, that South Africa’s proposed chrome ore export tax will hurt miners’ profitability and lead to job losses across the sector.
The online news publication attributed this challenge to South Africa’s Minerals Council. It reported that South Africa is the world’s biggest exporter of chrome, which is mostly used in the manufacture of stainless steel and as such, the high electricity tariffs, being the biggest global producer of ferrochrome, a combination of chrome and iron, led to the loss of the pole position to China.
These high electricity tariffs, which are an operational cost, were reported to have forced many smelters to shut down.
On June 26, it was reported that South Africa’s Cabinet announced it had agreed to lower power tariffs for chrome smelters as well as a proposal to impose a tax on chrome ore exports as part of efforts to stop the decline of the ferrochrome industry.
However, this is yet to be implemented and the delay in it coming to life is resulting in Maloma Colliery Limited being forced to remodel. She said the colliery will reduce production by suspending one shift per day.
This was necessitated by a decrease in their client orders. Shabangu said they had experienced a 60 per cent reduction in demand.
As such, she said this drastic drop in demand has coerced the country’s leader in anthracite coal mining to remodel its business.
The colliery will, among other things, halt capital projects and suspend all recruitment.
Full article available in our paper.
Leave a comment