One of the highest profile casualties of the latest rout in commodities went into business administration in South Africa on 26th August.
International Ferro Metals (LON:IFL) blamed low ferrochrome prices for increased losses, caused in turn it said by a reduction in Chinese steel production.
However, it wasn’t just the Chinese economy which copped the blame.
The local operating environment in South Africa has also become increasingly difficult.
The company cited militant union activity and “a general thrust for above inflation wage hikes” which have increased costs.
Also unhelpful was the country’s erratic electricity supply, which suffers from frequent outages but the costs of which are nonetheless rising.
IFM said that since 2007 the prices set by the state electricity utility Eskom have risen by an aggregate 21.5% ever year, for a cumulative total rise of 374% for heavy industrial users.
Against that, the company lost more than 10% of its ferrochrome production for the month of July because of load shedding and power trips.
IFM’s mines and furnace operations have now been shut down.
The knock-on effects of all this remain to be seen, but one company that’s closely tied in to IFM is Pan African Resources (LON:PAF).
Pan African treats mining waste from IFM’s operations to produce platinum at its Phoenix project, which sits on IFM ground.
These operations accounted for just 7% of Pan African’s post-tax profit in the six months to December 2014, but Pan African was in any case keen to stress that it had other sources of feedstock.
However, it did concede that Phoenix currently sources electricity, water and certain other services from IFM, so there could be some considerable impact.