Metals News
South African Strike Hits Ferrochrome Exporters-UPDATE 3
industry news
May 14,2010

JOHANNESBURG, May 14 -- A nationwide, indefinite transport strike paralysed South African railways and ports and forced mining groups Xstrata and Samancor to declare force majeure on Wednesday on ferrochrome exports.

The three-day-old strike at state logistics group Transnet widened after the company's biggest union joined in what is the latest public protest ahead of next month's World Cup soccer tournament in South Africa.

Xstrata said it would halt shipment of ferrochrome, a key ingredient in stainless steel, and chrome ore.

"The situation is still being assessed, until we've got a better idea of what's happening, it's going to be difficult to ascertain the impact," said Pam Bell, a spokeswoman at London-listed Xstrata.

Samancor, the world's 2nd-biggest ferrochrome producer, also declared force majeure, traders said.

Transnet operates no passenger services, but a prolonged strike could affect imports, internal fuel supplies and exports of fresh fruit, grains, ferrochrome, iron ore and coal.

South Africa is one of the world's biggest coal exporters, mainly to power stations in Europe and Asia.

A train transporting fuel from Durban on the east coast to the inland market derailed early on Wednesday in an incident which Transnet said was "sabotage", but no one was injured.

"Nothing is moving today," George Strauss, president of the United Transport and Allied Trade Union (Utatu), told Reuters.

Transnet said it was willing to discuss alternative options other than a further wage raise in order to end the strike.

"We do recognise that we may need to explore other elements that may not be limited to the wage offer, in order to resolve the dispute," the company said in a statement.

Two unions representing 85 percent of Transnet's 54,000 workers have rejected a pay offer of 11 percent and want a 15 percent rise -- well above the inflation rate of 5.1 percent.

The other union, the South African Transport and Allied Workers Union (Satawu), said workers would organise marches in Johannesburg, Durban and Polokwane from Wednesday.

Thirteen people were arrested in Durban after a protest turned violent on Monday.


Transnet, and commodities and fuel producers said they will be able to supply customers for days due to stocks at ports.

Fuel producers, including BP, Royal Dutch Shell, Engen and Chevron, said they have not yet been hit, but the South African Petroleum Industry Association (SAPIA) said some impact was expected from Thursday.

Kumba Iron Ore, a unit of Anglo American, said it was "severely impacted" by the strike, which has limited its ability to use the railways to send iron ore destined for export to Saldanha Bay, a harbour northwest of Cape Town.

ArcelorMittal's South African unit said it was using stocks for now as delivery of iron ore had been hit.

Coal producers said they may be forced to curtail production if the strike is prolonged and their depots at mines fill up.

"Once we become too full, we will have to start cutting back on production," said Mxolisi Mgojo, head of the coal unit at diversified miner Exxaro. He said Exxaro would carry out some maintenance during the strike to minimise the impact.

Coal traders said the impact on exports was likely to be minimal as stocks at the Richards Bay Coal Terminal (RBCT) are likely to last for weeks. If the strike goes on longer, miners might need to use expensive trucks to transport their coal.

Other industries, including exporters of fresh fruit, said they were already feeling the pain.

Power utility Eskom said the strike would have no impact on the transport of coal used to power its plants, since only small amounts of coal were carried by rail, with the rest supplied by conveyor belts directly from mines.


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