Bleak New Year for Transalloys as job cuts loom at South Africa's last manganese smelter

A grim outlook greets the New Year for hundreds of workers at Transalloys, the last operational manganese smelter in South Africa.

The company has issued a distressing Section 189 notice, warning of possible large-scale retrenchments set to take place within weeks.

Konstantin Sadovnik, chief executive of Transalloys, expressed the company's profound regret over this situation, saying, “We regret placing this level of uncertainty on our employees and their families at this time, but the ongoing lack of clarity around our operating environment leaves us with no responsible alternative.”

The potential job losses involve approximately 600 direct positions and threaten the livelihoods of an estimated 7,000 individuals linked to the smelter and the broader economy of eMalahleni, once known as Witbank.

According to Sadovnik, the company has reached a critical point where it can no longer sustain operations.

He cited energy costs as the key driver of this dire situation.

"At current NERSA-approved tariff levels, we are competing against international smelters whose electricity costs are roughly half of ours. That gap makes sustained operations impossible,” he explained.

Throughout 2025, Transalloys had to operate intermittently, driven by negative operational margins and ongoing cash-flow challenges. Currently, only two out of the smelter's five furnaces are operational, a stark indicator of how conditions have deteriorated.

Sadovnik underscored the challenges faced by manganese beneficiation, which he claimed is subject to harsher conditions compared to the better-known ferrochrome sector.

He noted that manganese smelting is significantly more energy-intensive, and being a non-integrated producer further hampers the company’s ability to cross-subsidise costs from primary ore production.

“Current market conditions, including exchange-rate pressures against the US dollar and euro, have made manganese beneficiation in South Africa fundamentally unsustainable,” he stated, adding that manganese ferroalloys are bulk commodities sold into highly price-sensitive global markets where electricity costs remain the single most decisive factor for competitiveness.

While Transalloys has previously welcomed governmental efforts to establish a sustainable energy pricing framework for energy-intensive smelters, Sadovnik pointed out that the absence of certainty now poses an opportunity cost that jeopardises the entire business.

He reiterated that the proposed blueprint solution, aimed at ferrochrome smelters with preferable pricing levels, should also apply to Transalloys. “This could preserve what remains of manganese beneficiation in South Africa, with potential to stabilise and even grow employment,” he said.

However, he cautioned that the prevailing uncertainty regarding implementation, timing, and the current exclusion of manganese smelters from discussions is heavily eroding the company's ability to shield jobs.

“Transalloys is hopeful that the issue will be resolved in the next two months and that implementation will be swift. Without that certainty, the company will have no option but to proceed with restructuring around February,” Sadovnik warned.

Despite immense challenges, Sadovnik affirmed that as a global manganese ferroalloys producer, Transalloys would continue to explore every possible avenue to preserve jobs, maintain social programmes, and meet its supply obligations.

He emphasised the urgency of the situation, stating, “Time is the critical factor now.”

BUSINESS REPORT