JOHANNESBURG (Reuters) - A joint venture in South Africa with commodities giant Glencore (L:GLEN) on Friday began consulting employees on possible job cuts because of the weak economic environment, it said.
The Glencore-Merafe Chrome Venture (J:MRFJ) runs seven chrome mines and five ferrochrome plants in South Africa, and employs a total of 11,448, including contractors, the Merafe website says.
"The (consultation) process is as a result of the worsening operating environment across the South African ferrochrome industry, including unsustainable electricity pricing," a company release on the Johannesburg Stock Exchange (JSE) said.
The process of laying off employees refers to the section 189 of the Labour Relations Act in the South African constitution, which requires companies to consult with employees and unions before it implements job cuts.
"Despite significant investments in an attempt to make the operations more competitive, the parties have continued to come under substantial operational and financial pressures," the statement said.
Glencore declined to comment on the number of employees that would be affected. Merafe referred queries to Glencore's Johannesburg office, which did not answer phone calls.
The statement said smelter operations in Lydenburg, Wonderkop, Boshoek and Lion would be affected as well as the Eastern and Western Chrome Mines.
South Africa, the world's top chrome ore producer, implemented a strict lockdown in late March to slow the spread of the novel coronavirus.
The lockdown forced many mines to halt production and the Glencore-Merafe Chrome Venture was among those to declare force majeure, releasing it from contractual obligations.
Swiss-based Glencore owns 79.5% of the Glencore-Merafe Chrome Venture, which has a total capacity of 2.3 million tonnes of ferrochrome per annum.
President Cyril Ramaphosa eased the lockdown restrictions in April, allowing mines to operate at full capacity but by then miners, as well as banks, retailers and manufacturers were announcing job reduction plans.
The National Treasury's worst case projections estimate the country could lose as many 7 million jobs due to COVID-19.