What's Happening?
Transalloys, the operator of South Africa's only functioning manganese smelter, is facing potential closure due to soaring electricity costs. The company has been operating at a loss for about three years, primarily because electricity accounts for nearly
40% of its operating expenses. The potential shutdown could result in the loss of around 600 direct jobs and impact approximately 7,000 individuals in the eMalahleni municipality. The company is seeking inclusion in a proposed electricity pricing framework to avoid closure, with a decision expected within the next two months.
Why It's Important?
The closure of the manganese smelter would have significant social and economic repercussions, affecting thousands of livelihoods. South Africa's energy crisis, characterized by underinvestment and operational failures at Eskom, has already led to numerous industrial shutdowns. The situation highlights the broader challenges faced by energy-intensive industries in the country, which are struggling with rising costs and unreliable power supply. The outcome of the proposed electricity pricing framework will be crucial not only for the manganese sector but also for the broader manufacturing industry in South Africa.
What's Next?
Transalloys is awaiting clarity on the proposed electricity pricing framework, which could determine the future of the smelter. If no solution is found, restructuring may begin around February. The government and energy regulator Nersa are working on measures to make industrial electricity more competitive, which could influence the decision. The situation is being closely monitored by stakeholders in the energy and manufacturing sectors.
