Miningweb: Eskom tariffs and Chinese competition drive Glencore-Merafe retrenchments, threatening thousands of jobs

Key topics:Glencore-Merafe JV begins retrenchment at Rustenburg smeltersElectricity costs, Chinese competition strain South Africa's ferrochromeOver 3,000 jobs at risk; unions demand constructive negotiations.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..BizNews Reporter.Thousands of jobs are expected to be affected in South Africa as the Glencore-Merafe Joint Venture (JV), the country's largest ferrochrome producer, announces a significant restructuring process. Merafe Resources, which holds a 20.5% stake in the JV, with Glencore owning the remainder, confirmed on Monday, 1 September 2025, that a consultation process has commenced under Section 189 of the Labour Relations Act. This retrenchment process targets the JV's Rustenburg ferrochrome smelter and vanadium operations. The decision to restructure directly results from "the continuing economic pressures facing the South African ferrochrome industry and the lack of sustainable industry solutions" to alleviate these challenges in the near to medium term. Power cost inflation and increasing electricity costs are the primary and persistent drivers of these difficulties. Despite the JV having a customised power supply tariff with the state-owned utility Eskom, it has been deemed insufficient to ensure economic viability. Japie Fullard, head of operations at the Merafe-Glencore Joint Venture, stated in August, "There's already a special tariff, but unfortunately that special tariff is not special enough for us to actually be viable in South Africa," stressing the need for "an electricity tariff that's even better than what we are seeing now". Fierce competition from Chinese facilities also contributes to the domestic processing industry's struggles.The retrenchment process will impact the Boshoek and Wonderkop smelters in Rustenburg, Glencore's Rhovan vanadium operations in the North West province, and its carbon division in Emalahleni. The Lion smelter is also under review, and its operating capacity could be halved. Additionally, Glencore plans to streamline and restructure support functions within the mining division at the Rustenburg and Lydenburg smelters, along with head office and shared services functions.The potential impact on employment is significant. According to Willie Venter, deputy general secretary of the Solidarity union, further closures could jeopardise approximately 2,425 direct and more than 17,000 indirect jobs. The National Union of Mineworkers (NUM) chief negotiator, Lefty Mashego, stated that "above 3,000 employees" at Glencore and Samancor mines are expected to be affected. Mashego described the retrenchment plans as "premature and disingenuous" and a "serious blow" to the economy, given South Africa's high unemployment rate. The NUM has called for constructive negotiations to safeguard jobs..Read more:.Miningweb: Eskom dispute could close South32 Mozam aluminium smelter, 2nd biggest in Southern Hemisphere.This latest move by the Glencore-Merafe JV follows a series of operational suspensions and closures within its facilities earlier in the year. The Joint Venture had previously suspended ferrochrome production from its Lion Complex facilities for maintenance. Merafe also independently idled its Boshoek smelter and its Wonderkop operations in May. Since 2020, four of the JV's five complexes have been mothballed. Glencore has already seen ten of its 22 furnaces either permanently or temporarily closed. These actions contribute to an estimated 300,000-350,000 job losses across South Africa due to the closure of 14 energy-intensive smelters nationwide.As part of the consultation process, which became effective on 1 September, discussions will include voluntary severance packages and potential redeployment of affected employees. Glencore has maintained that the retrenchment process is not a "forgone conclusion" and has notified all recognised unions, affected employees, and stakeholders.The ferrochrome industry is vital to South Africa's economy. The country holds around 80% of the world's known chrome ore reserves. In 2024, South Africa supplied approximately 3.3 million tons (Mt) of ferrochrome from a total global production of 17.5Mt. The Glencore-Merafe JV alone has an installed capacity of 2.3Mt a year, accounting for a third of South Africa's annual ferrochrome exports.The South African government has acknowledged the challenges faced by intensive energy users. Electricity minister, Kgosientsho Ramokgopa, indicated earlier this year that a proposal for improved tariffs for these users was under Cabinet consideration and had previously expressed an intention to "restart smelters". In June, the government approved a plan to support the ferrochrome industry with new electricity tariffs and introduced controls and taxes for chrome ore exports. However, these reforms have yet to be finalised.Glencore-Merafe's announcement of potential job cuts occurs amidst a mixed broader economic climate in South Africa. On the day of the announcement, the Rand strengthened against a weaker dollar. However, manufacturing sentiment in the country reportedly declined in August due to subdued activity and sluggish domestic and export demand. Conversely, new vehicle sales domestically saw a positive 18.7% year-on-year increase in August. The consultation process initiated by the Glencore-Merafe JV highlights the ongoing need for sustainable solutions to support key industrial sectors in the country.

Miningweb: Eskom tariffs and Chinese competition drive Glencore-Merafe retrenchments, threatening thousands of jobs

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