COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 29/LM/Mar09
In the matter between:
Aquarius Platinum SA (Pty) Ltd
Rustenburg Platinum Mine Ltd Acquiring Firms
and
First Platinum (Pty) Ltd Target Firm
Panel : D Lewis (Presiding Member), N Manoim (Tribunal
Member) and Y Carrim (Tribunal Member)
Heard on : 29 April 2009
Order issued on : 29 April 2009
Reasons issued on : 7 May 2009
Reasons for Decision
Introduction
[1] On 26 April 2009 the Tribunal approved the merger between Aquarius
Platinum SA (Pty) Ltd (“AQPSA”) and Rustenburg Platinum Mines (“RPM”)
(the primary acquiring firms), and First Platinum (Pty) Ltd (“FirstPlats”) (the
primary target firm). The reasons follow below.
The transaction and parties
[2] AQPSA is a South African subsidiary of Aquarius Platinum Ltd, a company
listed in Australia and the United Kingdom. RPM is a wholly owned subsidiary
of Anglo Platinum, the world’s leading producer of Platinum Group Metals
(PGMs), which in turn is controlled by Anglo American PLC. Both acquiring
1
firms are active in the mining, production and sale of PGMs. FirstPlats is a
company incorporated in terms of the laws of South Africa which holds mining
rights for PGMs in relation to certain portions of the Brakspruit Farm and
Spruitfontein Farm in the North West Province.
[3] The proposed transaction consists of two phases: In the first phase AQPSA
will acquire the business of Firstplats, comprising mining rights, properties
and related fixed and movable mining assets of certain portions of the
Brakspruit and Spruitfontein farms in the Bushveld Igneous complex in the
North West province. In the second phase, AQPSA will transfer the firm to
the pooling and sharing venture which exists between it and RPM in respect
of Marikana Mine, which is jointly controlled by AQPSA and RPM. On
completion of the transaction AQPSA and RPM will jointly control the assets
that constitute the transferred firm.
Rationale for the transaction
[4] The proposed merger will result in making mi ning and production of PGMs in
the area of the transferred firm possible and increase resources and reserves
under the control of the acquiring firms. For the target firm, the proposed
transaction represents an opportunity to realise certain mining assets which
have been isolated for some two years, and which would otherwise not be
realised without the kind of investment, technique, mining management and
expertise which will be brought in by the acquiring firms.
Relevant Market
[5] With respect to the relevant market, it has previously been held that PGMs do
not constitute a single relevant market but rather six relevant markets being;
platinum, palladium, rhodium, ruthenium, iridium and osmium. 1 However the
Commission found that there is a potential overlap specifically in the market
for platinum, palladium and rhodium. Although FirstPlats merely holds mining
rights for PGMs, the Commission, in their assessment considered the
rights for PGMs, the Commission, in their assessment considered the
potential overlapping product markets should FirstPlats mine its PGMs in
future.
1 See par 9 and 10 Two Rivers Platinum merger (Case No. 54/LM/Sep01) and Pandora Joint
Venture merger (Case No. 55/LM/Aug02).
2
Effect on Competition
[6] The Commission looked at the acquiring firms’ production levels of the
relevant products, and also considered the target’s firm’s anticipated
production levels, and found that the accretion in the post merger market
shares was insignificant and hence not sufficiently material to raise any
competition concerns. 2 At the hearing the Tribunal queried the source on
which the Commission based its market share calculations given that this
relied on a 1999 survey. 3 However the Commission not only looked at this
1999 survey, but also considered AQPSA’s report which dealt with the total
reserves of the PGMs market in South Africa. The merging parties also
reiterated that the numbers on the global basis have not changed much, and
that in terms of output, they have reduced instead of increasing.
[7] The merger leads to an increase in the PGM mineral rights that will fall under
the control of the world’s largest producer Anglo Platinum. However, the
Tribunal considered that FirstPlats is relatively a small player, not yet in
production, and that even if it mines in future, the market share accretion post
merger would be low. In addition, the change in HHI for all relevant markets
is below 35 points.
[8] In light of the above the Tribunal finds that the proposed transaction is
unlikely to substantially prevent or lessen competition in any of the relevant
markets.
Public Interest
[9] There are no public interest concerns.
___________________ 7 May 2009
N Manoim Date
D Lewis and Y Carrim concurring.
2 The post merger combined market shares for AQPSA and FirstPlats for platinum, palladium
and rhodium was calculated at 5.16%, 2.25% and 7.05% respectively; and for RPM and
FirstPlats the same was calculated at 32.35%, 15.16% and 34.27% respectively.3 Johnson Matthey (Platinum Today) report titled “Resources in South Africa” which refers to a
1999 report by Professor Grant Cawthorn.
3
Tribunal Researcher: L Xaba
For the merging parties: Werksmans Attorneys
For the Commission: Kwena Mahlakoana
4