End of the line for another major company in South Africa
The operator of South Africa’s last remaining manganese smelter said it may have to cut as many as 600 jobs as high power prices undermine the viability of its business.
Transalloys (Pty) Ltd. issued retrenchment notices to staff and is running only two of its five furnaces, the company, based in the coal-rich town of eMalahleni, east of Johannesburg, said in a statement Monday.
Surging South African power prices and competition from China have hit local processors of ferrochrome and manganese, both of which are key ingredients in steelmaking.
The country has about three-quarters of the world’s identified manganese-ore reserves.
“We are competing against international smelters whose electricity costs are roughly half of ours,” Transalloys Chief Executive Officer Konstantin Sadovnik said in the statement. “That gap makes sustained operation impossible.”
Glencore’s ferrochrome unit said earlier this month it would shutter two operations.
In November, labour union Solidarity said Samancor Chrome Ltd. may cut almost 2,500 jobs as it curtails operations.
South Africa’s government has acknowledged the pressures on the ferrochrome industry, with the cabinet approving a plan in June to negotiate new electricity prices and introduce potential controls and taxes on chrome-ore exports.
But the reforms have yet to be finalised, and the export levy is unpopular among miners.
Manganese processing faces “harsher conditions than the ferrochrome sector,” given it is more energy-intensive, Sadovnik said.
Without certainty on power pricing, Transalloys “will have no option but to proceed with restructuring around February,” he said.
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