SA MINING CRISIS TO HIT ESWATINI COAL, ECONOMY HARD

MBABANE – The recent downturn in South Africa’s ferrochrome industry is poised to deliver a significant blow to Eswatini’s coal sector. Due to this unpleasant development, Maloma Colliery—the country’s sole operational coal mine—is facing reduced demand, lower revenues and potential job losses. The ferrochrome industry refers to the production and trade of ‘ferrochrome’, an alloy primarily composed of iron and chromium.

High-performance

It is used as a key ingredient in the manufacturing of stainless steel and other high-performance alloys, providing enhanced strength, corrosion resistance and durability to the final product. Essentially, it is a vital part of the steel industry focused on producing this specific alloy for further use in steelmaking. South Africa’s ferrochrome producers, who are major buyers of Maloma’s anthracite coal, have announced possible furnace shutdown in response to weak global market conditions. This presents a direct challenge for Maloma, which exports 95 per cent of its coal to South Africa. JSE- and A2X-listed ferrochrome producer Merafe Resources has recently advised that it will review its ferrochrome smelting business and assess the potential measures through which ongoing market challenges can be addressed.

Downturn

The business review follows sustained pressure from the prolonged economic downturn in the global ferrochrome market, with Merafe not foreseeing an easing of this pressure in the near to medium-term. Merafe has a chrome pooling and sharing venture in place with Glencore Operations South Africa, in which Glencore holds a 79.5 per cent share and Merafe the balance.
The Glencore-Merafe chrome venture operates five ferrochrome smelters, 22 ferrochrome furnaces and six chrome mines. The venture produced 301 000 tonnes of ferrochrome in the year ended December 31, 2024. It is worth noting that Glencore is the major client of Maloma Colliery. The company’s CEO Japie Fullard had recently announced that they anticipate a prolonged negative impact on their ferroalloys business.

Intervention

“As I previously emphasised, these pressures are unlikely to ease in the foreseeable future and will require active intervention,” said Fullard. More than 400 000 tonnes of Maloma Colliery’s coal goes to the South African economy each year. “If ferrochrome furnaces are suspended in May 2025, demand for our product will shrink, leading to revenue losses,” Maloma Colliery CEO Jabu Shabangu, said in a questionnaire response.

“Business survives within an ecosystem. If one area is affected, the rest automatically follows,” the company explained, highlighting the broader impact on suppliers and service providers in Eswatini’s mining value chain. To mitigate the risks of ferrochrome dependence, Maloma is actively exploring alternative markets for its anthracite coal.

Potential

Titanium and other sectors that use coal are being considered as potential buyers. “The company is working on entering new markets and securing better trading terms with stakeholders,” she stated. She added that government intervention could also play a role in easing the industry’s struggles. Maloma has begun engaging authorities to explore relief measures, such as tax breaks and policy support, to sustain coal mining operations.

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