JOHANNESBURG (miningweekly.com) - South African chrome-miner and ferrochrome producer Samancor Chrome said on Tuesday that it was preparing to retrench workers as a consequence of its planned 55% cut in smelter production and 50% cut in chrome-mining during 2009.

Of the 4 800 employees, not more than 900 would be considered for retrenchment at this stage and the consultation process under way with unions would seek to reduce that number still further, Samancor Chrome human resources head Deidre Bredell told Mining Weekly Online.

The company, which is one of the largest ferrochrome producers in the world providing charge chrome, intermediate carbon ferrochrome and low-carbon ferrochrome to the stainless-steel industry, said that the drop in commodity prices had prompted the need to produce less chrome ore and chrome alloys.

"Despite the implementation of several measures at all the business units of the organisation over the past three months, such as extended paid leave granted over the shutdown period; discontinuance of contractors; reduction of overtime and the opening of voluntary retrenchment packages, the continuous uncertainty of the global stainless steel market has forced us to issue section 189 notices to all the recognised unions representing staff at our two mines and three smelters," the company said.

Solidarity spokesperson Jaco Kleynhans said that his trade union was “very grateful” for the pre-forced-retrenchment "measures" that Samancor Chrome had taken, but that such measures were in many cases unsustainable and actually a precursor to forced retrenchments.

Kleynhans said forced retrenchments would take place at all six of the Samancor Chrome’s units of Western chrome mine, outside Mooinooi; Ferrometals, in Witbank; Middelburg Ferrochrome, Eastern Chrome Mines and Tubatse Ferrochrome, near Steelpoort, and the Samancor head office in Johannesburg. Samancor indicating that it would continue with both voluntary retrenchments and voluntary early retirement.

The company said that the issuing of the 189 notices had started a 60‐day consultation process with the unions, the objective of which was to explore further alternatives that would minimise the impact on labour.

"What the process requires is that we explore whether retrenchments can be avoided completely. If the answer to that question is ‘no', consultation then turns to who will be selected for the forced retrenchments and the retrenchment packages that will be paid," she added.

"The most important portion, and the one we are busy with at this stage, is retrenchment minimisation to lessen the impact on the work force," Bredell said.

Options to avoid retrenchment could include job-sharing, reduced work hours and the acceptance by staff of periods of unpaid leave.

"There are an unlimited number of things one can do creatively with the unions to find alternatives to forced retrenchment," she said.

"We have already reduced contractor numbers. Where we could, we employed full-time employees in the contractor positions to avoid the impact on our own workforce.

"But we are running at such reduced capacity that we don't have a choice. We have to look at how labour costs can be reduced," she added.

There was not, however, a direct correlation between the percentage of production cuts and the percentage of personnel that would be retrenched, as there were many other fixed and variable costs that were targeted ahead of labour costs.

"We are not looking at more than 900 employees and we are hoping to reduce that number substantially during the consultation process," Bredell added.

In October last year, Samancor Chrome launched a broad-based employee-empowerment trust in which R2-billion of its shares were offered for sale to the Ndizani Workers Employees Share Ownership Programme Trust for R400-million, with the purchase being be financed by a five-year loan from Kermas, Samamcor's parent, which would be repaid at a reduced interest rate of 4,5%.

Samancor Chrome CEO Jürgen Schalamon said at the time that the establishment of the trust represented the company's commitment to serving its employees by not only redressing historical inequalities, but also creating a "real opportunity for our people to share in the success of the company".

In April 2007, Samancor Chrome announced that it would spend R1,4-billion on beneficiation projects in South Africa over the next two years, including a new pelletiser plant, a direct-current furnace and a smelter.

While the studies for these would continue, implementation would be delayed, Schalamon told Mining Weekly Online.

His personal opinion was that the ferrochrome market would begin recovering towards the middle of 2009, but would take longer for strong demand to return.

Schalamon said that Samancor Chrome had restarted two of its 16 furnaces at the beginning of the year, but did not expect to be operating at full tilt at any time this year.

"I am sure than during the consultation process there will be a couple of ideas on how retrenchment can be minimised.

"If we took into account the full cut in production, the numbers would have been greater, but we also have to prepare for the upturn.

"We have covered all out costs during the last three months. We had no losses. We want to avoid moving too quickly in the wrong direction," Schalamon added.