More jobs on the line because of electricity costs in South Africa

SOUTH AFRICA

Thousands more people stand to lose their jobs because of unstable electricity supply in SA, as Samancor Chrome Limited has become the latest employer to issue retrenchment notices.

In a statement issued on Thursday, Samancor said due to challenging trading conditions in the steel industry, it issued retrenchment notices to over 3 000 in terms of Section 189 A of the Labour Relations Act, and will now start the consultation process with unions.

“The process may potentially affect 2438 employees at the company’s mining operations and 599 employees at its smelters,” read the company’s statement.

Samancor said depressed ferrochrome and chrome ore prices, coupled with Eskom’s increasing electricity tariffs, have forced the company to reviewing its chrome ore and ferrochrome production levels for 2020. It now expects chrome ore production to fall by approximately 29% per annum, while ferrochrome production could reduce by around 20% if market conditions don’t improve.

Everywhere chrome producers are facing similar pressures, as Ferrochrome prices continue to fall due to weak global demand for stainless steel. But SA players have an additional odd stacked against them because of electricity costs and interrupted supply.

Samancor said given this, its cost-cutting and production improvement measures implemented over the past months may not be enough to keep jobs. But it said it remains committed to improving production to mitigate negative impact on its employees.

“These are challenging times for the chrome ore and ferrochrome industry and for all its stakeholders,” said Samancor Chrome.

Ferrochrome is a mineral mostly used to produce stainless steel and speciality steels. SA is the dominant player in the global industry, accounting for about 72% of the world’s chrome reserves.

The National Union of Metalworkers of South Africa (Numsa), whose members received the notices, said it was deeply concerning that loadshedding and the constantly rising cost of electricity in the country was accelerating job losses.

Merafe Resources also said earlier this week that “unsustainable electricity tariffs” have played a role in its decision to start a consultation process to retrench employees.

ArcelorMittal, Which confirmed on Thursday that over 1000 of its employees had ultimately been retrnched as a result of the “employee reorganisation” initiated last year, also cited the surge in electricity tariffs as one of the reasons at the time.

“Our position as NUMSA has always been that we need to ensure that Eskom provides the country with a cheap regular supply of electricity so that we can industrialise and build our economy.

“This is impossible to do whilst Eskom continues to lurch from one crisis to another. Loadshedding and high energy costs are having a direct impact on production, and in turn, this is resulting in workers losing their jobs,” said Numsa in a statement.

Numsa also said it is “dismayed” that many companies rush to retrench workers.