Samancor Chrome, one of the largest ferrochrome producers in the world, plans to retrench about 20 percent of its workforce. This comes as a result of a sharp drop in the demand for ferrochrome and a subsequent drop in commodity prices, according to South African trade union Solidarity.

The company will lay off 900 of its 4,690 workers and has already started a 60-day consultation period with the union after which the jobs will be cut. Samancor's executive director told Solidarity that, this decision follows after several measures had been implemented by the group in an effort to avoid retrenchments.

Samancor is not only cutting jobs, but production as well. Production at Samancor's smelters will be cut by 55%, while production at the group's mines will be cut by 50%. Alloy sales and export ore will also be reduced by 45% and 60% respectively.

According to Solidarity spokesperson Jaco Kleynhans, Solidarity is very grateful for measures such as these recently being implemented by several companies. However, the problem is now that the measures are in many cases not sustainable and that they are actually a precursor to forced retrenchments.

Ilze Nieuwoudt also with Solidarity said, It is very unfortunate that the company has to come to this decision, as we are only in a downswing phase that economists believe will recover by 2010. However they could not do otherwise at the moment due to the global financial crisis.

The slump in demand has also seen Samancor's rivals shut down some of their ferrochrome smelters.

It was also reported in Bloomberg that, ferrochrome makers have suspended more than two-thirds of capacity, according to competing South African producer Merafe Resources Ltd., as the global economic slowdown erodes demand for stainless steel. First-quarter ferrochrome contract prices plunged 57 percent from the preceding three months.