South Africa relaxes antitrust rules for companies facing high electricity costs

South Africa has loosened its antitrust regulations to allow firms battling high energy costs to build energy infrastructure together and negotiate contracts collectively.

In a government announcement seen by on Tuesday, South Africa's Trade Minister Parks Tau stated that the new measure was meant to help?distressed industry.

The Minerals Council of South Africa says that electricity costs have increased by over 900% in the last five years.

High power prices are a major problem for smelters and steelmakers, especially in Africa's most developed economy. They also face competition from China, which has lower electricity costs.

South Africa's Government is "working on a package" of measures that includes lower rates charged by the state-owned utility Eskom to help distressed companies.

The new regulations amend the anti-trust laws to allow firms to work together to "secure backup or alternative energy supplies, reduce energy costs, and secure shared or adjoining sites, infrastructure, equipment, and facilities".

South Africa used to be the largest global producer of ferrochrome (a mixture of chrome and iron), but it lost this position to China, mostly because of high electricity costs.

Many energy-intensive furnaces and smelters, such as ArcelorMittal South Africa’s long-steel works and a ferrochrome company owned in part by Glencore, had to shut down and lay off hundreds.

Transalloys which operates the last manganese smelter in South Africa, announced on December 30 that it could close the plant, and eliminate hundreds of jobs, due to high electricity prices. Reporting by Sfundo parakozov from Johannesburg and Nelson Banya from Harare. Editing by Alexander Smith

(source: Reuters)