COMPETITION TRIBUNAL OF SOUTH AFRICA
Case NO: 32/LM/Apr08
In the matter between
Aquarius Platinum (South Africa) Corporate
Services (Pty) Ltd Primary Acquiring firm
And
Platinum Mile Resources (Pty) Ltd Primary Target Firm
Panel : D Lewis (Tribunal member); Y Carrim (Tribunal member) and U
Bhoola (Tribunal member)
Heard on : 30 May 2008
Decided on : 30 May 2008
Reasons Issued : 08 July 2008
Reasons for decision
Approval
[1] On 30 May 2008 the Competition Tribunal issued a Merger Clearance Certificate
approving the merger between Aquarius Platinum (South Africa) Corporate Services (Pty)
Ltd and Platinum Mile Resources (Pty) Ltd unconditionally. The reasons for the approval
appear below.
Parties
[2] The primary acquiring firm is Aquarius Platinum (South Africa) Corporate Services
(Pty) Ltd (“ASACS”), a company incorporated in terms of the company laws of South Africa.
ASACS is a wholly owned subsidiary of Aquarius Platinum Ltd (“AQP”), a public company
listed on the JSE Securities Exchange.
[3] The primary target firm is Platinum Mile Resources (Pty) Ltd (“PMR”), a company
incorporated in terms of the company laws of South Africa. PMR is controlled by Mvelaphanda
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Holdings (“Mvela Holdings”).
Transaction
[4] In terms of the proposed transaction, ASACS intends to acquire 50% share in PMR
from Mvela Holdings. On completion of the transaction, ASACS will have joint control in
PMR.
Parties Activities
[5] ASACS holds a participation interest of 50% in the RK1 consortium 1, which owns
the RK1 project. This project comprises a chromite tailings retreatment plant (“CTR”) located
adjacent to Kroondal mine. The CTR plant treats old dumps and tailing streams obtained
from the beneficiation process used at neighbouring chromite mines. The concentrate
produced is sold to Anglo Platinum and Impala Platinum for further beneficiation.
[6] AQP is involved in the exploration, mining and concentration of platinum group
metals (“PGMs”), in particular platinum, which constitutes approximately 60% of its
production. AQP operates Kroondal, Marikina and Everest mines.
[7] PMR operates a PGM ore tailing plant. This plant treats tailings streams in
the same manner as the CTR plant. The concentrate produced is sold to Anglo
Platinum for further beneficiation.
Rationale for the transaction
[8] ASACS views the transaction as representing an attractive opportunity to invest in a
company with good prospects.
[9] For PMR’s shareholders, the transaction represents an opportunity to realise some of
their investment in PMR at an attractive price.
Competition Analysis
[10] Both merging parties are involved in the production of PGM ore concentrates. In
particular, the parties’ activities overlap in respect of platinum, palladium, rhodium and gold.
[11] Although the geographic market for PGMs is international 2, the Commission
1 This is a consortium comprising of ASACS, Ivanhoe Nickel and Platinum Ltd and Sylvia South
Africa (Pty) Ltd.
2 See Aquarius PlatinumRustenburg merger, case no: 35/LM/Jul03.
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accepted national shares provided by the merging parties as even post merger, they would
still not be significant players in the global market for PGMs. The merging parties combined
post merger market shares are as follows: platinum 5.3%, palladium 5.1%, rhodium 6.9%
and gold 2%.
[12] There are other major players in the market for PGM from whom the merging parties
will continue to face competition such as Anglo Platinum, Impala Platinum, Lonmin Platinum
and Northam Platinum. The horizontal overlap between the activities of the merging parties
is therefore unlikely to substantially prevent or lessen competition in the identified markets.
[13] The Commission also investigated the possibility of PRM’s ore tailings
retreatment plant treating dumps and tailing streams from AQP’s PGM mines,
thus resulting in a vertical integration. The Commission was able to establish
that it is not possible for the current PMR plant to treat old dumps or tailing
streams obtained from mining operations other than those at Anglo Platinum’s
waterfall complex, where its treatment plant is situated. In order for PMR to
perform treatment operations at any of AQP’s mining operations, it would need
to establish a new treatment plant at the relevant AQP mining operation, which
the parties deem unlikely.3
Public interest
[13] The transaction does not give rise to any public interest issues and is approved
without conditions.
___________________ 08 July 2008
D Lewis Date
Tribunal Member
Concurring: Y Carrim and U Bhoola
Tribunal Researcher : I Selaledi
For the merging parties : Read Hope Phillips Thomas & Cadman Inc.
For the Commission : Makgale Mohlala and Thaba Mavhase
(Mergers & Acquisitions)
3 It is estimated by the parties that the cost of establishing such a plant would be in the
region of R70 to R 100 million.
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