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Ferro Metals turns to court for a ruling on its tailings supplies

11 Jan 2016

International Ferro Metals SA (IFM SA), the domestic subsidiary of the London-listed ferrochrome producer put into business rescue in August, has applied to court to compel Anglo American Platinum's Rustenburg Platinum Mines (RPM) to continue supplying IFM with UG2 concentrator tailings under their 2010 contract.

Ferro Metals turns to court for a ruling on its tailings supplies

SA's ferrochrome producers have suffered for several years from weak global ferrochrome prices and above-inflation hikes in inputs, particularly electricity and labour. IFM SA was also hit by labour unrest last year.

On 29 December, Trevor Murgatroyd, the business rescue practitioner for IFM SA, notified stakeholders that the company had applied to the High Court in Johannesburg for an order against Rustenburg Platinum after the mine cancelled the supply contract.

IFM SA wants Rustenburg Platinum to be ordered to uphold the 10-year contract or continue supplying material until the matter is resolved.

The matter is set down for Tuesday, 12 January. Murgatroyd did not respond to further questions.

Anglo Platinum spokeswoman Mpumi Sithole confirmed Rustenburg Platinum had cancelled the supply contract.

She said it was entitled to do so when IFM SA was put into business rescue. The matter was now before court and Rustenburg Platinum would not comment further.

IFM SA has its own chromite mine, Lesedi, but Lesedi does not supply enough material for the Buffelsfontein beneficiation and smelting operation.

Under the business rescue plan, approved by a majority of creditors on 7 December, Samancor Chrome has been selected as the preferred bidder for IFM SA's assets. Samancor Chrome has offered R720m for the business as a going concern, excluding all liabilities.

Total creditors' claims against IFM SA are about R3.6bn. An estimate of the realisable value of IFM SA if it were liquidated showed it could raise R470.6m.

Murgatroyd concluded the company could not trade out of its current difficulties without a complete restructuring of its financial position and a capital injection.

Source: Business Day

Source: I-Net Bridge

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