JOHANNESBURG, June 23 (Reuters) – South Africa’s ferrochrome industry will be thrown into crisis if cash-strapped power utility Eskom is allowed to hike prices, with mines forced to close and as many as 200,000 jobs at risk, an industry group said on Tuesday.
Eskom, struggling to maintain power supplies and laden with debt, has asked the National Energy Regulator of South Africa to approve a 9.58 percent price increase.
While down from an original request of 12.7 percent, ferrochrome producers say that, on top of increases earlier this year, it would deal a hammer blow to the industry.
“The increase in electricity prices will further increase production costs and lead to the closure of most smelters in South Africa,” Jacobus Zaayman, a representative from the Ferro-Alloy Producers Association of South Africa, told a public hearing held by the regulator to consider tariff hikes.
Zaayman said as many as 200,000 jobs could go. It was not clear how many workers the industry employs.
South Africa is one of the world’s biggest producers of ferrochrome, an alloy of chromium and iron used mainly to make stainless steel.
“The mining industry is at a tipping point. We have absorbed as much as we could. Mine closures are a reality,” said Monique Mathys, head of economics at South Africa’s Chamber of Mines, which lobbies for metal producers.
The industry is grappling with weak demand from China, the world’s biggest consumer, where construction activity slows during the summer months.
Electricity prices rose in April when Eskom was allowed to recoup additional costs incurred by running its diesel-fired power stations,
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