Transalloys halts ferroalloy production as financial crisis intensifies
South African manganese smelter says years of financial losses and unsustainable electricity costs have forced it to suspend operations while urgent talks with Eskom continue
South African manganese smelter Transalloys as the company has suspended all ferroalloy production since the beginning of July.
According to Africa Mining News, the company’s CEO, Konstantin Sadovnik, said the decision was unavoidable after years of mounting financial losses.
The production halt places at least 600 permanent jobs at risk as the company proceeds with a Section 189 consultation process. Reports indicate that some retrenchment agreements have already been concluded.
“It has been a tough uphill battle,” Sadovnik told the publication.
“Our business has been losing substantial amounts of money for the past three and a half years. We have done everything possible to reduce costs, conserve cash, raise awareness and engage the government, Eskom and the regulators to find and implement a sustainable electricity tariff solution.”
He warned that the company’s future now depends on the outcome of discussions with Eskom, the National Energy Regulator of South Africa (Nersa) and the Department of Electricity and Energy.
“Now, effectively, our destiny is in the hands of Eskom, Nersa and the Department of Electricity and Energy. They are to determine whether Transalloys lives or dies. Further procrastination will amount to a death sentence,” he said.
Sadovnik cautioned that if no solution is reached by 31 July, the company could face irreversible collapse.
“It would trigger the irreversible collapse of the business, devastate jobs in eMalahleni and permanently erase South Africa’s manganese beneficiation industry together with decades of specialised skills and expertise. It would also wipe out an investment currently valued at around R6 billion,” he said.
He appealed to the government, Eskom, its management and board to intervene urgently before the temporary suspension becomes permanent.
“The decision to mothball operations and retrench employees is not one that will be taken lightly. We’ll stand for another round, in good faith and in the expectation that the ongoing negotiations with Eskom can still result in a timely and sustainable solution. We have obtained a board mandate to withhold the issuing of retrenchment notices until 31 July.”
