JSE-listed African Rainbow Minerals (ARM) has announced that all employees at the joint venture Cato Ridge Works (CRW), in KwaZulu-Natal, will be retrenched with effect from August 31, following a decision to permanently close the facility. About 310 permanent and 290 contract workers will lose their jobs.

The closure, which was announced on June 30, followed the conclusion of a formal consultation process in line with Section 189 of the Labour Relations Act.

Cato Ridge Works was established in 1956 and features a ferromanganese smelter. The first alloy from this plant was exported in 1959.

According to ARM, the decision came after a detailed assessment of CRW’s operational and financial viability. Despite prolonged efforts to identify alternatives, the operation continued to incur substantial and unsustainable losses.

"These losses have been caused primarily by prolonged weaknesses in global manganese alloy prices and escalating input costs, particularly electricity, which has increased by over 930% since 2008. The recent announcement of a potential electricity tariff reduction will not be sufficient to rescue this business," Assmang said in a statement on July 1.

ARM stated that the CRW complex would be remediated and repurposed, alongside the adjacent vacant land, into a commercial and logistics hub aimed at generating future economic activity and employment.

ARM reported that, on June 27, several binding legal agreements were concluded between Assmang, Cato Ridge Development Company (CRDC), Feralloys, Assore, Assore SA PropCo, ARM and Sakura, concerning various Assmang business interests. ARM described the resolution of these matters as a strategic priority.

Assmang is jointly owned by Assore and ARM, each holding 50% of its issued shares.

As part of these agreements, the board of Assmang approved the sale of various land parcels, properties and houses to Assore SA PropCo, a wholly-owned subsidiary of Assore.

The transaction, known as the Cato Ridge transaction, is structured in two phases.

In the first phase, Assore SA PropCo will acquire land and houses located in or near CRW from Assmang. These properties will be developed by Assore SA PropCo, with a portion to be transferred at no cost to selected host communities.

The second phase involves the sale of the remaining land on which the CRW site is located. The total purchase consideration payable by Assore SA PropCo to Assmang amounts to just over R453.2-million.

Assmang is responsible for the implementation and cost of all remediation and clean-up work related to the site, subject to limitations agreed with Assore SA PropCo.

In addition, Assore SA PropCo will assume specific remediation responsibilities for portions of the land being acquired.

The completion of the Cato Ridge transaction, including the community property transfer, is subject to several conditions. These include the payment of the purchase price by Assore SA PropCo, the completion by Assmang of a reverse osmosis water treatment plant and a brine dam and compliance with environmental legislation by Assmang.

Separately, Assmang, Assore SA, Sakura and ARM signed a sale agreement under which Assmang will sell its entire 54.36% shareholding in Sakura to Assore. From the effective date of July 1, 2024, the risk and benefit associated with the shares will transfer to Assore SA, although legal ownership will be transferred only upon closure of the transaction.

Following completion, Assmang is expected to distribute R900-million in cash to ARM.

Assore has also undertaken to ensure that Assmang is released from all obligations related to any guarantees, sureties, indemnities, securities or similar instruments issued for the benefit of Sakura.

In partnership with Siyakha Consulting, Assmang has offered affected employees access to wellness programmes, financial planning and budgeting, resumé writing, employment seeking opportunities, reskilling program options, and entrepreneurship skilling.