Glencore, Merafe could cut up to 665 jobs at South African smelter

JOHANNESBURG (Reuters) - Joint venture partners Glencore <GLEN.L> and Merafe Resources <MRFJ.J> could cut up to 665 jobs at their Rustenburg ferrochrome smelter in South Africa because of problems including power cuts and rising electricity tariffs.

The potential job cuts highlight the risks posed to Africa's most industrialised economy by struggling state power utility Eskom, which is battling breakdowns at its creaking coal-fired power plants and is mired in a financial crisis.

Some mining and metals companies say steep tariff increases granted to Eskom over the past decade now threaten the viability of their operations.

Merafe said in a statement on Monday that it had started consultations with workers.

"The consultation process is as a result of deteriorating operations and market conditions across the South African ferrochrome industry, including unsustainable electricity tariffs and interruptions, cross subsidies and real cost inflation," Merafe said.

"Despite significant investment to make the operation more competitive, the Rustenburg Smelter has suffered material financial losses which are expected to continue for the foreseeable future."

Shivani Chetram, a Glencore spokeswoman, said there could be 665 job cuts but the outcome of the consultations was not yet clear.

The Rustenburg smelter has an operational capacity of around 430,000 tonnes of ferrochrome a year.

(Reporting by Alexander Winning; Editing by Kirsten Donovan)