Samancor Faces Retrenchments Amid Skyrocketing Energy Costs

South Africa’s ferrochrome industry is staring down one of its darkest periods in decades.

Samancor Chrome, one of the country’s largest ferrochrome producers, has warned it may cut as many as 2 500 jobs next year. The company has cited soaring electricity costs as the central driver behind the potential retrenchments. The cost of power can consume up to 60% of production expenses.

Ferrochrome is a mix of iron and chromium that is used to make stainless steel, giving it strength, shine, and resistance to rust. South Africa is the world’s largest producer of ferrochrome.

South Africa used to dominate the refining and smelting side of the market as well but was overtaken by China in 2012.

According to a trade union, Solidarity, Samancor has already tried cost-cutting measures but was unable to turn its loss-making operations around. The company is now considering shuttering or downsizing multiple facilities.

This crisis is not unique to Samancor. Glencore is no longer producing ferrochrome in South Africa after closing ten of twenty-two furnaces and retrenching roughly 1 500 workers at its Rustenburg and Lydenburg smelters.

Solidarity CEO Dirk Hermann blames government failures, particularly Eskom’s unaffordable tariffs and Transnet’s collapse, for creating an environment in which heavy industry simply cannot compete.

Hermann warns that these retrenchments threaten more than company balance sheets; they imperil entire communities that rely on these industries. While other countries in the region, such as Zimbabwe, Angola, and Zambia, expand their ferrochrome production, South Africa risks losing both jobs and global market share.

“This is going to develop into a social crisis. The government has caused it, and they must take responsibility,” he said.