The National Energy Regulator of South Africa (Nersa) has confirmed the approval of a two-year Negotiated Pricing Agreement (NPA) between Eskom and Mpumalanga-based Manganese Metal Company (MMC).

The approval was granted by the Energy Regulator, Nersa’s highest decision-making body, on July 30, following a public comment period, with the regulator concluding that the agreement was in line with the Department of Electricity and Energy’s amended short-term framework for NPAs.

The agreement, Nersa said in a statement, applied to MMC’s production of high-quality, selenium-free electrolytic manganese metal in Mbombela, where electricity accounted for about 41% of total production costs.

The NPA would be implemented from August 1, 2026, to July 31, 2028. The two-year duration was designed to cover the period ahead of the implementation of a renewable-energy power purchase agreement that MMC has concluded to meet 70% of its consumption.

Under the NPA, the Energy Regulator has approved a “special base tariff”, which would escalate yearly on April 1 by the producer price index plus 1%.

Unlike an earlier deal between Eskom and ferrochrome producers Samancor Chrome and Glencore-Merafe, under which Nersa confirmed a tariff of 62c/kWh, details of the “special base tariff” for MMC were not disclosed.

An earlier Nersa consultation paper indicated that such disclosure would enable international competitors to establish MMC’s breakeven price.

Nersa confirmed, however, that the NPA would cover only Eskom’s variable costs and make a contribution to its fixed costs.

Eskom said standard-tariff customers would not subsidise the revenue under-recovery and justified the agreement on the basis that it secured baseload demand that had been made vulnerable by the rise in electricity tariffs. Eskom also said other customers and the broader economy would be negatively affected if the demand was lost.

MMC had a projected yearly baseload consumption of about 360 GWh when operating at a load factor above 90%, and Nersa said MMC would be liable for a minimum consumption payment based on 80% of normal consumption.

Eskom is required to submit progress reports to Nersa every three months, outlining actual electricity consumption, as well as costs and socioeconomic benefits compared with those presented in the application.

“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,” full-time regulator member primarily responsible for electricity regulation Willy Majola said.

At the time of the application, MMC indicated that it employed 380 full-time employees and 280 contractors to produce some 28 000 t of 99.9% selenium-free electrolytic manganese metal yearly.