By 
In a crucial policy move designed to safeguard South Africa’s high-value industrial capacity and domestic mineral beneficiation, the National Energy Regulator of South Africa (NERSA) has officially approved a two-year Negotiated Pricing Agreement (NPA) between state power utility Eskom Holdings SOC Limited and Manganese Metal Company (Pty) Ltd (MMC).
The decision, finalized during the Energy Regulator’s meeting on 30 July 2026 and publicly announced this week, grants MMC a special base tariff for its high-quality, selenium-free electrolytic manganese metal processing operations in Mbombela, Mpumalanga. Commencing no later than 1 August 2026 and extending through July 2028, the agreement comes at a critical juncture for South Africa’s industrial base, which continues to navigate high input costs, global market volatility, and energy sector restructurings.
Key Highlights of the Agreement
- Contract Duration: Two years (1 August 2026 – July 2028).
- Tariff Escalation: Adjusted annually on 1 April by the Producer Price Index (PPI) + 1%.
- Minimum Offtake Commitment: Minimum quarterly consumption payment based on 80% of normal baseline usage.
- Upside Profit-Sharing: Equal (50/50) split with Eskom on annual gross profits exceeding 6% projections, capped at the value of the Megaflex rebate.
- Quarterly Compliance Oversight: Mandatory reporting by Eskom on consumption, costs, socio-economic impacts, and renewable energy transitions.
Balancing Industrial Relief with Commercial Discipline
MMC is a globally recognized producer of specialized electrolytic manganese metal—an essential material utilized in high-tech manufacturing, energy storage, electronics, and specialized steel production. Because electro-winning and metal refining processes are exceptionally power-intensive, power pricing represents one of the single largest determinants of operational viability.
Under the approved framework, Eskom will charge MMC a special discounted base rate compared to standard industrial tariffs like the Megaflex schedule. However, to protect public funds and ensure commercial accountability, NERSA’s approval embeds structured risk-sharing mechanisms:
- Volume Guarantees: MMC remains liable for a minimum quarterly consumption payment based on 80% of its normal baseline operations. This protects Eskom’s baseline revenues while allowing adjustments for substantiated, significant operational disruptions.
- Profit Sharing: Should favourable market conditions yield annual gross profits exceeding 6% above projections, MMC must share 50% of the excess gains with Eskom. This upside mechanism is capped at the total financial rebate provided relative to standard Megaflex tariffs.
- Controlled Escalation: The special rate will adjust every April by PPI + 1%, providing predictable cost structures aligned with broader economic inflation.
“This approval will help safeguard critical industrial capacity, preserve thousands of direct and indirect jobs, support local beneficiation and mitigate broader negative economic and social impacts on affected communities and the national economy,” stated Mr. Willy Majola, Full-Time Regulator Member Primarily Responsible for Electricity Regulation.
Stakeholder Alignment and Regulatory Safeguards
Eskom submitted the application on 28 May 2026 pursuant to the Department of Electricity and Energy’s Amended Short-term Framework for NPAs and the Electricity Pricing Policy. During NERSA’s public consultation process, written submissions received from labour representatives directly affected by MMC’s operations were broadly supportive, citing job security and plant longevity.
To ensure the special pricing delivers on its promised socio-economic goals, NERSA has established a stringent monitoring regime. Eskom must submit progress reports three months after implementation and quarterly thereafter until July 2028. These reports will track:
- Actual electricity consumption vs. initial projections.
- Verified cost structure dynamics and direct/indirect socio-economic benefits.
- The status of MMC’s Power Purchase Agreements (PPAs) with renewable energy suppliers as the plant transitions toward sustainable power sources.
The Broader Economic Context
Economists view the NERSA decision as a pragmatic alignment of tariff regulation with national industrial strategy. By offering targeted electricity pricing to high-value industrial manufacturers, the state avoids forcing value-adding refiners into care and maintenance, preserving thousands of regional jobs in Mpumalanga.
Furthermore, requiring MMC to report on renewable energy supplier PPAs signals a clear regulatory intent: short-term pricing agreements are designed as a bridge toward private green energy integration rather than a permanent state subsidy.
The full Reasons for Decision document will be published on the NERSA website (www.nersa.org.za) in due course.
