Business Day 

15 May 2026

There has been no pro­gress regard­ing a nego­ti­ated price agree­ment with Eskom, read a stock exchange news ser­vice announce­ment from ArcelorMit­tal SA earlier this year.

The steel­maker remains hope­ful, though, after the 62c/kWh deal with major fer­ro­chrome pro­du­cers that it will get a sim­il­arly favour­able nego­ti­ated price agree­ment.

A few weeks ago the act­ing dir­ector-gen­eral of the elec­tri­city depart­ment, Subesh Pil­lay, told legis­lat­ors an energy pri­cing policy would be released soon.

The cur­rent advocacy across the indus­trial base for favour­able energy pri­cing is a sign of the times. The queue of activ­it­ies we can retain or attract on the basis of cheap elec­trons grows by the day, from alu­minium smelt­ers to cement and glass kilns, green hydro­gen elec­tro­lys­ers and advanced AI data centres.

In this sense the min­er­als energy com­plex that former trade & industry dir­ector-gen­eral Zav Rus­tomjee and eco­nom­ist Ben Fine observed has evolved in com­plic­ated ways.

Rap­idly escal­at­ing (and increas­ingly uncom­pet­it­ive) indus­trial tar­iffs have cre­ated an inlet for imports of things we his­tor­ic­ally pro­duced across this com­plex. Much has been said about ferro-alloys. However, the same risk of dis­place­ment has been observed in other smelter or kiln-based pro­duc­tion in glass, ceram­ics, non­fer­rous base metals and other sim­ilar products as recent trade probes show.

Some of this import com­pet­i­tion is com­ing from the South­ern African Devel­op­ment Com­munity, as the case of ceramic tiles and glass indic­ate, as neigh­bour­ing coun­tries attract energy­in­tens­ive invest­ment close to their min­eral endow­ments.

The tech­no­lo­gical char­ac­ter­ist­ics of kiln and smelter-based pro­duc­tion cre­ate an incent­ive for over­pro­duc­tion.

Because you simply can­not switch off some of these plants, or doing so comes at con­sid­er­able cost, capa­city cur­tail­ment is dif­fi­cult, neces­sit­at­ing large invent­ory pile-ups. This requires stable access to external mar­kets.

The case of Hulamin is of interest. The Pietermar­itzburg-based alu­minium rolled products maker exports more than two fifths of its pro­duc­tion. Its melt­ing and cast­ing oper­a­tions use gas (nearly two thirds of its energy require­ment), with only a third of its energy needs drawn from the grid.

Run­ning such mills at full capa­city and the low share of pro­duc­tion absorbed loc­ally neces­sit­ates not only a favour­able energy pri­cing policy, but calls for an act­ive trade strategy to enable access to key mar­kets. Such a strategy is fur­ther com­plic­ated by the national secur­ity tar­iffs levied on Hulamin by the US, a key des­tin­a­tion mar­ket with the EU. This high­lights the indis­pens­able role of eco­nomic dip­lomacy in mak­ing the busi­ness case for cast­ing and smelt­ing activ­it­ies viable in a rel­at­ively small mar­ket like ours.

Such dip­lomacy also has to con­tend not only with the admin­istered pri­cing of energy, but also the pri­cing of emis­sions, a cru­cial vul­ner­ab­il­ity in an eco­nomy like ours that relies on coal­based energy as bor­der taxes such as the EU’s Car­bon Bor­der Adjust­ment Mech­an­ism are con­sidered world­wide.

This makes the diver­si­fic­a­tion of our energy mix an imper­at­ive that requires not only firm level responses, as the recently pub­lished integ­rated report of Hulamin shows, but also con­sid­er­a­tion of the extent of sub­sidies and cap­ital expendit­ure exten­ded to renew­able and gas energy gen­er­a­tion and stor­age.

As a recently pub­lished Stats SA data print shows, renew­able energy sup­ply grew by nearly 6,000 GWh in 2021-24. The trans­mis­sion of such energy to indus­trial activ­it­ies that are sens­it­ive to the pri­cing of emis­sions by bor­der taxes remains a chal­lenge.

While we can­not shake off the leg­acy we have in indus­trial activ­it­ies that require con­sid­er­able energy in the min­er­als energy com­plex, the cal­ib­ra­tion of the cost of elec­trons that fuel indus­trial pro­duc­tion and the man­age­ment of our emis­sion pro­file remain import­ant.

If we are to remain the home for old and new indus­trial activ­it­ies we may have to shun the “coal or green” bin­ary that has con­tam­in­ated local debate and accept the plur­al­ity of energy options needed for an eco­nomy as diverse and com­plex as ours.

• Cawe is a Chief Commissioner at the International Trade Administration. He writes in his personal capacity.