South Africa’s once dominant ferrochrome industry is on the brink of collapse and requires a government bailout. That decline is not because the world no longer needs ferrochrome. It is because South Africa’s leaders tied their industrial policy to a “green” agenda that undermines reliable, affordable energy and sacrifices economic strength.
What is happening in South Africa should concern every country that still cares about manufacturing jobs, supply chains and energy costs for ordinary people.
Ferrochrome – made largely of chrome ore, coal products and with lots of electricity – is not a boutique commodity. Valued for its hardness and resistance to corrosion, ferrochrome is a critical component of stainless steel, the alloy used in the making of kitchen appliances, industrial tools, passenger vehicles and construction infrastructure. It is difficult to imagine modern manufacturing without ferrochrome.
All it took was for South Africa to build a leading stainless steel industry was its domestic access to this valuable commodity. South Africa has two strengths worthy of envy: the world’s largest known chrome ore reserves and a ferrochrome production base second only to China’s. That combination should secure the competitive advantage of South African ferrochrome. Yet, the industry is dissolving.
Reporting a decline of more than 25% in ferrochrome production from 2024 to 2025 was Glencore PLC, a London-based titan in the sector that owns 80% of what was the world’s largest producer, the Glencore-Merafe Venture in South Africa.
The drop in the South African operation’s output – to 430,000 tons from 600,000 – stems from the government’s hostility toward coal and preference for technologies like wind turbines and solar panels – positions that ignore the fundamental laws of energy.
Robert Cartman, a senior analyst at Fastmarkets, predicts that South Africa’s total ferrochrome production could fall from 3.3 million tons in 2024 to a pitiful 1 million tons in 2026. At that point, South Africa ceases to be a major player. Mines will close. The expertise will migrate. The revenue will vanish.
Ferrochrome production is an energy-intensive beast that needs a steady, cheap power supply for electric arc furnaces, which won’t tolerate the intermittent whims of wind and solar. When the clouds roll in or the wind dies, a smelter operating at 1,700 degrees Celsius cannot simply “pause.”
Just as importantly, coal is not only a power source for this industry. Metallurgical coal is a chemical necessity that provides carbon as a reductant for stripping oxygen from chromium ore. Without coal, there is no ferrochrome.
There is no practical alternative to fossil fuels for the ferrochrome industry, but South Africa’s energy regime is discouraging the use of these economical energy sources and compromising the reliability and affordability of electricity.
Electricity rates have been rising for years. In 2025 alone, the National Energy Regulator approved an increase of nearly 13%, continuing a long trend of hefty hikes that stretch household budgets and corporate balance sheets.
While South African furnaces go cold, the demand for stainless steel continues to grow. However, a significant portion of the market has moved away from South Africa, allowing China to surpass it as the leading ferrochrome producer.
China understands what Pretoria has forgotten: Industrial dominance requires reliable, affordable power that can be dispatched when users need it, none of which can be provided by solar or wind. The Chinese government happily imports South African chrome ore, processes it using its own coal-fired power plants, and sells the finished ferrochrome to the world. South Africa is effectively exporting a large portion of its gross domestic product, outsourcing jobs to China and perpetuating domestic poverty.
Under the pressures of South Africa’s woke ESG (environmental, social and governance) demands, global investment firms and banks are abandoning the country’s resource sector. Coal-dependent industries in South Africa are deprived of insurance and financial services while massive amounts of coal fuel the Asian industrial machine.
It is a rigged game. South Africa tangles itself in “green” tape and “carbon” taxes to appease foreign elites, while global competitors double down on the fossil fuels necessary to build strong economies. South Africa’s newest Integrated Resource Plan 2025 (IRP2025) continues to favor wind and solar.
Electricity Minister Kgosientsho Ramokgopa recently admitted that skyrocketing electricity bills are hurting. “The Department of Electricity and Energy acknowledges that the rising cost of electricity presents a serious challenge to households, businesses, and the broader economy,” he said.
This admission is a rare moment of clarity from a government that usually deals in obfuscation. Whether promises of “policy and structural measures” to “over time” reduce the cost of electricity are ever fulfilled remains to be seen. What is clear is that the current trajectory means the complete collapse of the South African ferrochrome industry is a mathematical certainty.
Policies that aim to save industry after the damage is done are reactive, not strategic. South African leaders must pivot to an energy agenda that accepts the present reality: Coal and natural gas are indispensable for industrial competitiveness – at least until affordable, reliable, on-demand alternatives can match their performance and cost.
This commentary was first published by Real Clear Markets on January 7, 2026.
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