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Exxaro resources says it is contemplating the possible retrenchment of employees at its beleaguered AlloyStream project, after all efforts to resuscitate the ailing Letaba ferromanganese pilot plant failed.

The diversified miner outlined in a notice last week that AlloyStream used technology licensed to the Exxaro group, comprising a single-step continuous reduction process that converted manganese feedstock to ferromanganese.

The technology had been successfully demonstrated on a semicommercial scale at Letaba, which was operated in conjunction with partner Assmang, which assisted in proving the technology and mitigating the remaining risks of scalability, refractory life and access to raw materials.

In January, the performance period was completed and, after further evaluation, Assmang elected not to proceed with the project based on the AlloyStream technology.

“The exit of Assmang negatively impacted on the [technology’s] roll-out strategy and the establishment of the next phase of the commercial furnace in South Africa.

“Exxaro is not in the position to solely use the technology for the production of ferromanganese, owing to the lack of the required raw materials,” the miner outlined.

Following Assmang’s exit, Exxaro conducted an investigation into the continued operation of the facility and found the cost of operating it to be “prohibitive”.

“To compound matters, the Letaba [project] had to be terminated on June 24 owing to an electrical drive failure,” the group said.

It added, however, that it had investigated several alternatives to retrenchments, including the possibility of concluding a deal with another South African company, which proved unsuccessful.

It also looked into restarting the Letaba plant, but found that the cost to rebuild and restart the furnace after a technical failure would be “even higher” and, thereafter, the cost of operation would be “excessive”.

“This option would only be considered if another party would participate and cofund the project, but partners were not forthcoming,” Exxaro maintained.

While an Indian company had expressed interest to participate in the AlloyStream technology, it indicated that it would be unwilling to fund the cost of the Letaba plant.

Exxaro further noted that, “after considering all alternatives”, the only viable option that could be explored was to do a technology transfer to the Indian company, noting that it was currently in the process of drafting agreements to this effect.

In light of the constraints, the company proposed that the Letaba plant be decommissioned, which would result in the current structure of the AlloyStream project becoming redundant.

“[The company] further proposes that, in place of this structure, a new technology transfer structure is created.

“The employees that are unsuccessful in being redeployed in either the new technology transfer structure or in other operations in the Exxaro group will be retrenched,” the company stated.

Retrenched employees would be given 30 days’ written notice of retrenchment, which would be effective October 31.

• [Editor:Sophie]