Polokwane silicon metal smelter, the only one of its kind in South Africa, could be forced to shut down due to unsustainable power costs.
The smelter is operated under Silicon Smelters, a subsidiary of Ferroglobe, which has operated various plants in South Africa for 100 years.
The group’s history in the country dates back to 1926, when its eMalahleni plant began producing calcium carbide, followed by the commissioning of ferrosilicon furnaces.
Ferroglobe expanded its footprint in 1997 with the acquisition of the Polokwane silicon metal smelter, followed by the eMalahleni ferrosilicon smelter in 2008 and the addition of a silica fume plant in 2009.
Over time, the company also invested in five quartz mining operations and grew into the largest charcoal producer in Southern Africa, while remaining the continent’s only silicon metal producer.
Silicon metal is used in the aluminium, chemical, solar and defence industries, while ferrosilicon is essential for steel and stainless steel production.
Despite this long-standing investment, Ferroglobe has warned that it may be forced to close operations across all its South African facilities due to an unprecedented escalation in electricity prices.
CEO Marco Levi said energy costs have reached unsustainable levels, making continued operations financially unviable.
He explained that electricity tariffs have increased by more than 900% since 2007 and now account for over half of the company’s production costs.
This has left the business at a severe disadvantage compared to international competitors operating in regions with lower or more stable electricity pricing.
The pressure has already forced significant cutbacks. Ferroglobe placed its Polokwane smelter on care and maintenance in 2024, with retrenchments affecting more than 300 employees and contractors.
Production at the eMalahleni operation was also reduced by 30% during the same period. “Without a viable, long-term electricity pricing framework, we cannot continue to absorb operational deficits,” the company said.
Send a damaging message
It also warned that it may have to move production to facilities outside South Africa where conditions are more favourable.
In an interview with Moneyweb Radio, Lucinda Hinxman, director and head of employment and labour at CMS South Africa, said the impact would ripple through households and the broader economy.
Hinxman stressed the strategic importance of the operation and noted that being the only one here means that if we lose them, we’ll have to start looking at importing.
She warned that this would drive up costs across multiple sectors. “So it’s not even just the employees that are impacted, it’s the whole economy that then has to bear the implications of this,” she said.
A further concern is the potential loss of specialised skills, with significant broader impacts. She noted that estimates suggest that up to 60,000 people could ultimately be affected through the wider value chain.
Hinxman also criticised what she described as a reactive approach to rising electricity costs. “We are seeing more of a reactionary response from government,” she said.
She referenced similar warnings from other industry players in the past. Hinxman said that the government waits for these industries to really get on their knees before meaningful policies are considered.
While potential solutions such as tax relief or regulatory reform have been raised, she said the issue lies in execution rather than legislation. “It’s not often the laws need to be changed, but how we’re implementing them,” she said.
She stressed that the closure of such a key industrial player would send a damaging signal. “In this particular climate, the world is in a bit of a crisis, and I think it just sends a terrible message.”
