Mass layoffs loom for Samancor as Eskom's price cut fails to save jobs

Image credit: Samancor

The National Union of Mineworkers (NUM) vowed to fight the planned job cuts at the ferrochrome smelter.

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Eskom announced the price cut for Samancor and Glencore's joint venture with Merafe Resources late last month after the distressed firms agreed in December to shelve planned job cuts while negotiating with the electricity provider.

Their electricity costs had risen tenfold since 2008, exacerbating the smelters' problems as they face growing competition from Chinese producers.

Samancor has, however, resumed lay-off procedures, while the Glencore-Merafe JV said it had deferred its job cuts to 31 March.

"This move comes as a devastating blow to the workforce, particularly after NUM fought tirelessly to negotiate for lower electricity tariffs to ensure the sustainability of the company's operations," the union said in a statement.

"The union remains committed to challenging this and will explore all available avenues to save the jobs of our members," it added.

South Africa's labour laws require companies to consult unions before implementing job cuts.

Samancor said it would start talks with unions representing workers across its operations in the next few weeks.

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"While the reduced tariff addresses immediate electricity cost pressures, the current terms and conditions underpinning it continue to pose a threat to the long-term viability of the ferrochrome industry," Samancor said in a response to a Reuters query.

The company did not disclose details of those conditions.

The proposed layoffs will impact approximately 2,400 employees across the company's smelting and corporate offices, Samancor said.

The government says only 11 out of South Africa's 66 smelters are operational, mainly due to high electricity costs.

Africa's most advanced economy and the world's biggest chrome ore producer, South Africa, has lost its position as the top global processor of chrome into ferrochrome to China.

Energy-intensive smelters combine chromium and iron to produce ferrochrome, which is mainly used in steel production.