Key facts
- Transalloys ceased production at its last South African smelter on July 1.
- The company cited high electricity tariffs from Eskom as the reason for closure.
- The smelter produced silico-manganese and ferro-manganese.
- The shutdown puts approximately 600 permanent jobs and 7,000 downstream livelihoods at risk.
- Transalloys has been experiencing financial distress since the end of 2022.
- Negotiations with Eskom, Nersa, and DEE are continuing until July 31.
South African manganese alloy producer Transalloys has ceased all production at its last remaining smelter in the country due to an inability to compete caused by high electricity tariffs, the company announced.
The silico-manganese and ferro-manganese producer shut down all furnaces on July 1, as negotiations over electricity tariffs with energy utility Eskom and the South African government's Department of Energy and Electricity (DEE) continued.
Transalloys is a major producer of manganese ferro-alloys across Africa, with South Africa holding about 80% of the world's high-grade manganese ore reserves and the company contributing 155,000 tonnes per year of alloy output. The halted production and potential permanent closure of the smelter are expected to significantly impact customers reliant on South African alloy supply.
The suspension of the smelter places approximately 600 permanent jobs and an estimated 7,000 downstream livelihoods at risk. Transalloys officially concluded Section 189 consultations and a collective retrenchment agreement, citing the plant's financial distress since the end of 2022.
Transalloys will continue negotiations with Eskom to achieve a sustainable solution until July 31, when the retrenchment notice will be issued. Rising energy tariffs in South Africa over the past three years have weighed heavily on ferro-alloy producers, driving persistent financial losses at smelters unable to offset higher rates through significant price increases to customers.
Chief executive Konstantin Sadovnik stated that Transalloys' production was curtailed due to sluggish global demand over the past 3.5 years. The shutdown follows a hardship notice submitted by Transalloys to Eskom and Nersa in December, seeking short-term relief from electricity tariffs.
Sadovnik noted that the ferro-chrome industry had secured reduced tariff rates after discussions with Eskom and received intermediary reduced tariff solutions. He questioned why a similar framework could not be extended to non-ferro-chrome smelters like manganese and ferro-silicon, which represent only 11% of the ferro-alloys sector's power consumption.
Glencore Merafe Chrome Venture, a major ferro-chrome producer, secured a three-year pricing framework. Sadovnik expressed frustration over the continued lengthy negotiations for the rest of the sector without certainty or a timeline, emphasizing the business has been losing substantial amounts of money. He stated that the company's survival now depends on Eskom, Nersa, and DEE, warning that further delays would be a "death sentence."