Unions warn of showdown with govt as Transalloys lays off workers over power costs

Banele Ginindza

Labour unions are warning of an impending confrontation with government over the urgent setting and implementation of new electricity tariffs for ferrochrome smelters, after Transalloys has become the latest company to issue a retrenchment notice amid persistently high power costs.

Transalloys said in late December that it had issued a Section 189 notice that could impact 600 jobs, which could take effect in the coming weeks. The company warned that it is no longer able to sustain operations under the current electricity pricing regime.

Transalloys CEO, Konstantin Sadovnik, said electricity is the smelter’s biggest cost driver and that, at current Nersa-approved tariff levels, the company was unable to compete with international rivals.

"That gap makes sustained operation impossible. The smelter has no choice in the matter. 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,"Sadovnik said.

The development has intensified pressure on government from organised labour, which argues that delays in finalising a competitive electricity tariff are accelerating job losses across the ferrochrome and broader ferroalloy sector.

During the festive season, the National Union of Metalworkers of South Africa (Numsa) marched to the offices of the Presidency to register its frustration over the growing number of smelters placed under care and maintenance. The union warned that continued inaction would result in a “massive job loss bloodbath”.

Numsa has called on the Presidency, the Minister of Electricity and Energy and Eskom to urgently approve a competitive electricity tariff of 62c/kWh for the smelter industry, saying workers can no longer tolerate delays.

“This matter has been in discussion for the past three years,” Numsa said in a statement.

“Numsa is very clear that government must stop exporting jobs out of the country by failing to beneficiate our Chrome Ore and Manganese. Countries like China have no Chrome Ore or Manganese and yet they have opened up many smelters to process South Africa’s raw material.”

In a petition submitted to government, Numsa outlined the scale of job losses already recorded or looming across the sector. At the Rustenburg smelter, around 3 000 jobs have already been lost following its mothballing, with further ripple effects expected throughout the value chain.

The union said at least 1 195 jobs are expected to be lost at Glencore’s Western Smelter in Rustenburg, including positions at its head office. A further 25 jobs are at risk at Lion Smelter in Mpumalanga, while at least 70 jobs are on the line at Glencore Char Technology.

Numsa added that Glencore will have retrenched about 2 000 workers in total by December 31, 2025.

According to the union, Almar Investments retrenched approximately 538 workers between June and September 2025, while more than 5 000 workers at Samancor could face job losses if retrenchments continue into January 2026.

Trade union Solidarity has also declared a dispute against the South African government over the wave of retrenchments and said in December that it was planning a series of protests to highlight the seriousness of the crisis.

This followed a mediation process attended by employers including Columbus Steel, Ferroglobe, Transalloys, Samancor, MMC Nelspruit and Glencore. During the process, the Ferro Alloy Producers Association made a presentation containing what Solidarity described as “shocking” figures on retrenchments.

"Due to the mediation protocol, the content of the discussions may not be disclosed. Solidarity hoped that progress could be made through discussion," Dr Dirk Hermann, CEO of Solidarity, said last month.

"One of Solidarity’s demands was that a multi-departmental team be formed to address the different elements of the crisis. However, the government did not show urgency and was not prepared to hold further discussions."

Electricity and Energy Minister Kgosientso Ramokgopa has, however, expressed confidence that negotiations to rescue South Africa’s struggling ferrochrome smelter industry are nearing a breakthrough.

Last month, Ramokgopa said electricity tariffs of between 60c and 70c per kilowatt-hour were emerging as a realistic target, significantly lower than the 87c/kWh currently on the table. He said such pricing would help bring South African smelters closer to the electricity costs enjoyed by competitors in other jurisdictions.

Ramokgopa also outlined progress already made in negotiations, noting that smelters had moved off Eskom’s standard Megaflex tariff of R2.12/kWh to a negotiated price of R1.35/kWh, then to R1.28/kWh, before government and Eskom made a firm offer of 87c/kWh.

Unions have warned that unless a final, competitive tariff is urgently implemented, further retrenchments and closures across the smelter industry are inevitable.

BUSINESS REPORT