COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 13/LM/Feb02
In the large merger between:
Xstrata Ltd
and
Xstrata SA (Pty) Ltd
Duiker Mining (Pty) Ltd
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Reasons for Decision
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Approval
The Competition Tribunal issued a Merger Clearance Certificate on 13 March 2002
approving the merger without conditions. The reasons for our decision are set out below.
The Merger
The transaction
The primary acquiring firm is Xstrata Ltd (“Newco”) a new company formed for the
purposes of this transaction. The issued shares in Newco are to be traded on the London
Stock Exchange. It is intended that 38.5% of the issued shares in Newco will be held by
Glencore International AG (“Glencore”).
The primary target firms are Xstrata South Africa (Pty) Ltd (“Xstrata SA”) and Duiker
Mining (Pty) Ltd (“Duiker”), a wholly owned subsidiary of Glencore. Xstrata SA is a
wholly owned subsidiary of Xstrata AG, a company listed on the Swiss Stock Exchange.
Glencore owns approximately 38,5% of the issued shares in Xstrata AG. Xstrata SA
indirectly holds, through Carbonex (Pty) Ltd, 75% of the issued shares in Maloma
Colleries Ltd, a company incorporated in Swaziland.
This transaction is part of a restructuring process within Glencore International AG.
Newco or wholly owned subsidiaries of Newco will purchase the entire issued share
capital of Xstrata SA and Duiker.
Evaluating the merger
The relevant market
Newco is a newly formed company and does not manufacture or produce any products or
render any services.
Duiker’s main focus is to mine and supply stream coal used in power generations. It also
produces bituminous coal.
Xstrata supplies Ferrochrome, Chromite ore, Vanadium Pentoxide, Ferrovanadium and
Anthracite from its Swaziland subsidiary Malome. It uses approximately 45% of the
production internally, the rest is sold.
Bituminous coal and anthracite are not considered metallurgic substitutes. There is,
therefore, no product overlap between the parties in the merger if the merger is defined
narrowly.
In a broadly defined market the market share of the parties would be 8.19% of the coal
market in South Africa.
Effect on competition
The Commission is of the opinion that whether one defines the market broadly or
narrowly the merger will not substantially prevent or lessen competition. We agree with
the Commission’s analysis and conclusions and endorse its report.
Public interest
According to the party there will be no loss of employment, neither does the merger give
rise to any other public interest concerns.
_____________ 15 April 2002
D.H. Lewis Date
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Concurring: N. Manoim, P. Maponya
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