With just a day to go before the end of the year, the news broke that 600 jobs are on the line in eMalahleni as Transalloys warned of possible large-scale retrenchments.

Witbank News reports that Transalloys chief executive Konstantin Sadovnik said that 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.”

Transalloys cannot sustain operations

 “At current Nersa-approved tariff levels, we are competing against international smelters whose electricity costs are roughly half of ours. That gap makes sustained operation impossible.”

Throughout the year, Transalloys operated intermittently as negative operational margins and sustained cash-flow pressure made continuous production impossible.

The plant is currently running only two of its five furnaces.

Sadovnik added that manganese beneficiation faces harsher conditions than the ferrochrome sector.

Manganese smelting is significantly more energy-intensive, and Transalloys’ position is further weakened by the fact that it is not an integrated producer and cannot cross-subsidise beneficiation from primary ore production.

According to Sadovnik, current market conditions, including exchange-rate pressures against the US dollar and euro, make manganese beneficiation in South Africa fundamentally unsustainable.

Manganese ferroalloys are bulk commodities sold into highly price-sensitive global markets, where electricity costs are the single most decisive competitiveness factor.

While Transalloys has previously welcomed the government’s efforts to develop a sustainable energy pricing framework for energy-intensive smelters, the absence of certainty has now become the opportunity cost that threatens the business in totality.

Based on the information available, he said the proposed blueprint solution for ferrochrome smelters, at preferred pricing levels, would also be the correct solution for Transalloys.

“This could preserve what remains of manganese beneficiation in South Africa, with the potential to stabilise and even grow employment,” he said.

However, he also warned that uncertainty around implementation, timing and the current exclusion of manganese smelters in discourse is eroding the company’s ability to protect jobs.

Time is of the essence

Sadovnik said that the company remains ready to work urgently with the government, Eskom, Nersa and trade unions to find a sustainable solution.

“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 said.

He concluded that the company will continue to explore every possible avenue to preserve jobs, maintain social programmes and meet its supply obligations.

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