Merafe Resources has initiated retrenchment discussions at its Boshoek and Wonderkop smelters in the North West, signaling potential closures driven by soaring electricity costs. The move threatens thousands of jobs and billions of rand in export earnings, as the company grapples with the ongoing energy crisis affecting South Africa’s ferrochrome and chrome mining industries.
The joint venture, owned with Glencore, has already shut down 10 of its 22 furnaces over the past four years, resulting in approximately 1,800 jobs lost. Now, with the latest suspension of operations at the Boshoek and Wonderkop smelters, the industry faces further upheaval.
In a statement released on the Johannesburg Stock Exchange (JSE) news service, Merafe confirmed it had started a Section 189 Labour Relations Act consultation process, which indicates that closures are imminent if a sustainable solution isn’t found. The high electricity prices have made it more profitable for companies to export raw chrome ore rather than smelt it domestically into ferrochrome, exacerbating the industry’s decline.
The industry’s troubles are compounded by the closure or de-rating of other key operations, including the Rustenburg and Lyndenburg smelters, which are now on care and maintenance. The venture is also evaluating its Lion smelter, which recently suspended ferrochrome production for maintenance, with plans to possibly halve its capacity.
Merafe cited the “continuing economic pressures facing the South African ferrochrome industry” and the absence of viable industry solutions as the primary reasons behind these difficult decisions. The government’s efforts to extend negotiated power tariffs—aimed at shielding local manufacturers from double-digit electricity hikes—have yet to fully stabilize the sector.
Recent industry developments highlight the crisis: South32’s Hillside smelter in Richards Bay received a confidential discount on electricity bills, saving R92 billion over ten years. Meanwhile, Assmang announced the retrenchment of 600 workers following the closure of its KwaZulu-Natal smelter. In Mozambique, South32 plans to put its Mozal aluminium smelter on care and maintenance next year, risking around 5,200 direct jobs and up to 22,000 indirectly.
With export markets strained and power costs soaring, South Africa’s mining and ferrochrome industries are at a critical crossroads, with thousands of jobs hanging in the balance and the future of the sector uncertain.