Samancor Chrome threatens 2,500 job losses at mines in South Africa

Samancor Chrome, the South African chrome producer, could axe almost 2,500 jobs at its mines in response to weak prices for the metal and power supply problems.

The mining company is considering eliminating jobs at its Eastern Chrome and Western Chrome mines because chrome ore prices are “under huge pressure” and it is paying more for less stable electricity supply in an “unsustainable” situation, according to letters seen by the Financial Times.

The review highlights the risks posed to South Africa’s mining industry by the crisis at Eskom, the country’s stricken electricity utility, which is hampered by ageing coal plants and $30bn of debt.

Samancor Chrome, which was formerly owned by Anglo American and BHP Billiton, said that it had absorbed costs for the past six months but it has now been forced to reduce headcount “in order to reduce costs and secure the long-term viability of the business”, which has also been hit with higher production costs and lower productivity.

The announcement by the mining and smelting company follows a similar letter to unions last week by joint venture partners Glencore and Merafe Resources, who said that they may let as many as 665 jobs go at their smelter.

In December last year, diamond and platinum group metal miners were forced to suspend production due to record rolling blackouts implemented by Eskom.

Power cuts by the state utility cost the South African economy up to 118bn rand ($8.2bn) in 2019 and are expected to continue for the next two to three years, the country’s independent science council said on Wednesday.

The unemployment rate in South Africa is 29.1 per cent, which increases to 38.5 per cent on an expanded definition of people who have given up looking for work, according to official statistics.

Stanford Mazhindu, a spokesperson for trade union UASA, said “it’s absolutely terrible. We can’t have anyone else who loses their job. The situation is not getting any better.”

Samancor Chrome employs 5,714 people at the two mines towards the north of South Africa and it holds five smelting operations in the country.

Chromite is smelted into ferrochrome and then used in stainless steel. South Africa is currently the second-biggest producer of ferrochrome in the world after China and Samancor Chrome says that it is the world’s second-largest producer, outputting over 1m tonnes a year.

Anglo American and South32 hold a separate joint venture called Samancor Manganese.