Ferrochrome producer Samancor Chrome has issued a retrenchment notice in terms of Section 189 of the Labour Relations Act (LRA).

It envisages that about 2 400 employees may be retrenched at its smelting operations, including Dikwena Chrome, Ferrometals, Middelburg Ferrochrome, TC Smelter, Tubatse Alloy and Tubatse Ferrochrome, as well as at its corporate offices.

Samancor employs 2 403 people at its smelters and corporate offices.

“The company has taken a provisional view that it has to restructure and reduce the number of employees to reduce costs and secure its long-term viability,” it says in the notice.

The severance package and payments it proposes includes the payment of each employee's wages for the 30-day notice period, and one week's payment for every year of service completed at the company, as well as the payment of outstanding leave.

Samancor will enter into a consultation process with its employees or their representative trade unions over the next few weeks. The LRA provides for a minimum consultation period of 60 days.

One reason for the proposed retrenchment include the smelters' accumulated unsustainable standing costs over the past 12 months as a result of the company not maintaining full operational capacity, primarily owing to costs related to operating these furnaces.

Further reasons for the retrenchments include the current electricity price and the need to restructure the business to reduce costs and to ensure future sustainability.

“The ferrochrome industry is facing significant challenges, particularly owing to the cost of electricity, which has placed considerable strain on Samancor's financial position. In response, it implemented a series of stringent cost-saving measures over the past year.

“Despite these efforts, the current electricity price, compounded by the smelters' accumulated standing costs over the past 12 months, have rendered the situation increasingly unsustainable,” the company says.

It tried to avoid or minimise possible retrenchments through natural attrition, cost-saving and productivity improvement initiatives, the termination of contractors, the review of fixed-term contracts, not affording increases to D- and E-level employees, suspending performance bonuses, limiting the working of overtime and suspending training programmes.

These alternatives did not achieve the desired results.

Every position in the company’s smelting operations and corporate offices may be affected, ranging from the lowest level to the highest level of employees, Samancor says.

It proposes that D- and E-level employees be selected for retrenchment, based on their positions becoming redundant.

The details of the affected positions at D- and E-levels will be clarified during the consultation process.

Employees affected by the proposals will be assisted in terms of compiling an exit portfolio that will, among others, include assistance with updating their curricula vitae, time off to find alternative work and a letter of reference, Samancor says.

Affected employees will also have access to counselling for financial and wellbeing support through the Employee Wellness Programme.

It also proposed that, should any vacancies become available within the company within the next six months from the date of retrenchment, suitably qualified retrenched employees will be given preference to fill such vacancies.

Samancor will apply for the appointment of a retrenchment facilitator.

It emphasises that no final decision has been made in terms of the retrenchments, and it remains committed to engaging in this process transparently and in good faith.