Director’s Cut: Eskom’s smelter lifeline – Agnes Mlambo on saving 15,000 SA jobs

Eskom Distribution boss Agnes Mlambo joins Alec Hogg to explain the emergency power deal with Glencore, Samancor and Merafe that halted mass retrenchments, the brutal economics behind smelter shutdowns, the tense negotiations with Nersa, and why this high-stakes rescue could become a new template for keeping heavy industry alive in South Africa.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..Watch here.Listen here.BizNews Reporter.South Africa’s struggling smelter industry stepped back from the brink this week after Eskom brokered a temporary power pricing agreement that could safeguard up to 15,000 jobs. At the centre of the negotiations was Agnes Mlambo, Eskom’s newly appointed Group Executive for Distribution, who has found herself at the sharp edge of one of the most urgent industrial rescue operations the country has faced in years.The metals crisis has been building since early 2024. Global commodity prices slumped while imports flooded the domestic market, squeezing margins for energy-intensive producers like Glencore, Merafe and Samancor. With electricity one of the largest cost components for smelters, operations became increasingly unviable.“Market prices plummeted and our smelters simply could not compete anymore,” Mlambo explained. “They approached us for relief because the normal tariffs were no longer manageable.”Eskom initially responded by applying through the National Energy Regulator for a temporary special electricity tariff. Following public hearings, smelters were granted relief of around 40 percent below the average business tariff, buying the industry time to stabilise.That breathing space ran out earlier this year. Despite lower tariffs, deteriorating market conditions meant even discounted electricity costs were no longer sustainable. Shutdown threats returned, bringing the livelihoods of thousands of workers into question.“This is how we landed where we are now,” Mlambo said. “Even that reduced price could not keep operations afloat.”After intense negotiations, Eskom and the major producers signed a memorandum of understanding that halts immediate closures while a longer-term solution is developed. However, Mlambo stresses that the agreement is not yet a final settlement.“It’s still very early stages,” she said. “We have an aspiration in terms of the price we must get to, but we cannot reach it using the traditional methods we used in the past.”She explains that the previous tariff arrangement effectively required the rest of Eskom’s customers to subsidise smelters. That approach is neither politically nor financially sustainable, especially as households and businesses themselves face rising electricity costs.“We simply cannot ask other customers to carry the burden,” Mlambo said.The current talks take a fundamentally different approach. Eskom and smelter operators are unpacking the entire value chain behind power supply, from coal procurement through generation and transmission to final delivery. The aim is to redesign both pricing structures and consumption models.“We need to review every part of the system,” Mlambo explained. “Not only Eskom’s business, but how customers operate as well. Smelters may need to improve energy efficiency or adjust operational processes to consume less electricity while we work on pricing solutions.”The negotiations could set a precedent far beyond the metals industry. Heavy users in steel, cement and mining are closely watching developments.“Yes, absolutely this could become a template,” Mlambo confirmed. “That is how we are approaching it.”The challenge for Eskom is balancing commercial reality with South Africa’s broader economic interests. Smelters are significant exporters and major employers, particularly in regional economies where alternatives are limited. Losing those jobs would have ripple effects through supplier networks and households.“What is best for South Africa is best for Eskom,” Mlambo said. “You cannot separate the two. Our customers, the country and Eskom are all interconnected.”She argues that job preservation and export earnings ultimately support Eskom too, as a healthier economy means more sustainable long-term electricity demand and revenue.Confidence remains cautious but strong that a solution can be found.“This is not just an Eskom issue or a Glencore issue,” she said. “Government is involved, labour is involved, and all relevant stakeholders are working together. With that level of commitment, I believe there is no way we walk away without a workable solution, even if it is not a perfect one.”Short-term risks remain. The breathing space runs out at the end of February next year. Should global commodity prices fall further before a final settlement is reached, financial strain could quickly return.“One of the key issues is mitigating that risk,” Mlambo acknowledged. “We are stress-testing different scenarios to find a sustainable long-term structure that can protect the industry from extreme price cycles.”A recovery plan could also restore production volumes. Eskom currently expects about 40 percent of mothballed smelter capacity to return to operation under interim arrangements, with the MOU aiming to bring output back to full capacity over time. Importantly, Eskom says the grid can handle the added demand.“This is capacity we were supplying until recently,” Mlambo explained. “We lost these volumes only late last year. We can support a full return to production.”Concerns among the public about renewed electricity shortages have also been addressed.“There is no risk of load shedding because of this,” Mlambo insisted. “Eskom has significantly improved generation performance, and private sector capacity is coming online under the IRP programme. We are confident there is sufficient supply.”Smelters require stable baseload power, which at present can only be guaranteed by Eskom.“That is why it is essential Eskom remains deeply involved,” she said.Estimates place roughly 5,000 direct jobs at risk from closures, with downstream impacts lifting the total to 10,000 to 15,000 jobs potentially affected. Momentum has increased in recent days after more active engagement from Nersa.“In the past week alone we have already held multiple meetings,” Mlambo said. “They understand the urgency and are engaging constructively within their regulatory framework.”Since moving into her role in August, Mlambo believes Eskom’s approach to industrial customers is evolving.“We are expecting a new way of doing business,” she said. “This direction comes from the Group CEO Dan Marokane and is supported at ministerial level. It is a national effort.”Summarising the past few days, Mlambo described them as intense but encouraging.“Everyone is worried. Everyone is thinking differently,” she said. “We are working around the clock. There is not a moment when people are not engaging.”The outcome is still to come, but for now, South Africa’s smelters have a lifeline and thousands of families have a reason to breathe again.

Director’s Cut: Eskom’s smelter lifeline – Agnes Mlambo on saving 15,000 SA jobs

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