South African mining giant puts 2,500 jobs on the chopping block

Samancor Chrome may cut as many as 2,496 jobs in South Africa next year as it considers closing or slimming down operations because of high energy costs, a labour union said.

The company informed labor groups that the rising power costs “make it impossible for the ferrochrome industry to survive,” Solidarity said in a statement, citing a letter from the employer. 

Operations that could be shuttered or downsized include the corporate office, Dikwena Chrome, Ferrometals, Ferroveld, Middelburg Ferrochrome, TC Smelter, Tubatse Alloy and Tubatse Ferrochrome, according to Solidarity.

South Africa is the world’s largest producer of chrome ore, a stainless steel ingredient, yet the domestic processing industry — particularly smelting operations — ceded its title as the biggest producer of ferrochrome to China in 2012 because of inconsistent and insufficient electricity supply.

Companies including Glencore Plc, whose ferrochrome venture said earlier this month it would cut jobs at its last active smelter, have cited rising electricity prices as a key factor behind the sector’s decline.

Samancor explained that it tried cost-cutting, but it was unable to turn the loss-making operations around, Solidarity said. A required consultation process with trade unions, aimed at mitigating job losses, is set to begin in early January.

In June, South Africa’s government approved a plan to support the ferrochrome industry, by agreeing on new electricity tariffs as well as introducing controls and taxes for exports of chrome ore. Those reforms are yet to be finalized.

“The sector is heading towards a wave of mass retrenchments due to excessive electricity tariffs, which the government has repeatedly promised to review since the beginning of this year,” Solidarity said.