Samancor Announces Job Cuts Amid Declining Power Costs, Union Confirms Plan

Samancor has confirmed plans to eliminate 1,200 jobs, a reduction of roughly 18% of its workforce, despite a 12% decline in the cost of electricity since January 2026, according to union sources. The cuts are being framed as a response to sustained low production levels and a 22% drop in chrome output year-on-year through Q1 2026. The company operates key mines and smelters in Limpopo and the Northern Cape, contributing significantly to South Africa's ferrochrome exports, which account for over 70% of global supply. The timing of the announcement is notable: electricity prices for industrial users have eased following the National Energy Regulator of South Africa’s (NERSA) revised tariff adjustments, with prices for large industrial consumers now averaging R2.45/kWh—down from R2.78/kWh in early 2025. Despite this improvement, Samancor cited a continued erosion in cash flow, reporting a 34% decline in operating margins during the first quarter. The job cuts will affect both skilled and unskilled roles, with the heaviest impact expected at the Mogalakwena smelter complex. The union representing affected workers, the National Union of Mineworkers (NUM), has called for urgent negotiations, warning that the move could destabilize communities already strained by high unemployment and energy instability. Market implications include a potential tightening in global ferrochrome supply, given South Africa’s dominant role. The commodity, used in stainless steel production, has seen a 6% price increase in recent weeks due to supply concerns. Shares in Samancor (SOMJ.JO) fell 5.3% on the day, underperforming the broader JSE Top 40 index (^JTO), which dipped 1.2%. The energy market, tracked by the CL=F crude oil futures contract, remained stable, indicating that the mining sector's challenges are isolated to domestic structural issues rather than global energy trends.