Another Major South African Company on the Brink of Collapse

The operator of South Africa’s last remaining manganese smelter stated that it may have to lay off up to 600 employees, as skyrocketing electricity prices have made its business operations unsustainable.

Transalloys (Pty) Ltd., headquartered in eMalahleni—a coal-rich town east of Johannesburg—said in a statement on Monday that it has issued retrenchment notices to its staff and is currently running only two out of its five furnaces.

South Africa’s local ferrochrome and manganese processors are reeling from a double whammy: surging domestic electricity prices and fierce competition from China. Both ferrochrome and manganese are indispensable core raw materials for steelmaking.

Notably, South Africa holds approximately three-quarters of the world’s proven manganese ore reserves.

Konstantin Sadovnik, CEO of Transalloys, stated bluntly in the announcement: “Our international counterparts have electricity costs that are roughly half of ours. Such a huge cost gap makes it impossible for our company to maintain sustainable operations.”

Similarly, the ferrochrome division of mining giant Glencore announced earlier this month that it would shut down two production facilities.

As far back as last November, South Africa’s Solidarity trade union revealed that Samancor Chrome Ltd. was expected to cut nearly 2,500 jobs due to drastic operational downsizing.

The South African government has acknowledged the severe pressures plaguing the ferrochrome industry. In June this year, the cabinet approved a special plan aimed at negotiating new electricity pricing schemes and considering the introduction of controls and taxes on chrome ore exports.

However, to date, the relevant reform measures have not yet been finalized, and the proposed export tax has faced widespread resistance from mining enterprises.

Sadovnik further pointed out that the manganese processing industry has a much higher energy intensity than the ferrochrome sector, thus facing an “even more harsh” business environment.

He emphasized that if the uncertainty surrounding electricity pricing lingers, Transalloys “will have no choice but to launch business restructuring around February next year.”