Photo by: Duane Daws
JOHANNESBURG (miningweekly.com) – Deteriorating business conditions have pushed London-listed International Ferro Metals’ (IFM’s) South African subsidiary into business rescue proceedings.
The financially distressed IFM SA, which operates the Lesedi underground mine and ferrochrome-smelting operations, had been battling a downward trend in its operations and profitability that had proved more “deep-seated and sustained than anyone expected”.
Since the beginning of the 2015 financial year, the company had faced unsustainably low ferrochrome prices, rising costs, including labour and electricity costs, and interruptions in power supply and the resultant production losses.
The company had recorded a pretax loss of R176-million for the six months to December 2014. The company expected to report similar operating losses for the second half of the 2015 financial year, ended June 30.
The business rescue process, which would take around six months, could see some of the IFM SA’s furnaces and all mining operations idled to reduce expenses.
However, the parent company would continue to sell upper group two chromite produced under a contract with Rustenburg Platinum to cover some of the ongoing costs.
IFM said it had been approached – and subsequently entered negotiations – regarding a potential sale of IFM SA and another subsidiary Purity Metals.
“Even though IFM SA has been placed in business rescue, IFM itself remains solvent and expects to have sufficient cash to be able to cover its expenses of continuing operations during the period of the business rescue and to implement the proposed sale of IFM SA and Purity,” the company assured shareholders.
Purity Metals, which owns 80% of the idled Sky chrome mine, was not expected to enter business rescue.