COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 21/LM/Mar12
In the matter between:
WILRU Investments One Hundred Thirty
Four (Pty) Ltd Acquiring firm
And
Exxaro Base Metals Namibia (Pty) Ltd Target firm
Panel : Yasmin Carrim (Presiding Member)
Medi Mokuena (Tribunal Member)
Andiswa Ndoni (Tribunal Member)
Heard on : 02 May 2012
Order issued on : 02 May 2012
Reasons issued on : 14 May 2012
Reasons for Decision
Approval
1] On 02 May 2012 the Competition Tribunal (“Tribunal”) approved the
merger between WILRU Investments One Hundred and Thirty Four
(Pty) Ltd and Exxaro Base Metals Namibia (Pty) Ltd. The reasons
for approving the proposed transaction follow below.
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Parties to the transaction
2] The primary acquiring firm is WILRU One Hundred and Thirty Four
(Pty) Ltd (“WILRU 134”). WILRU 134 has its registered address in
Windhoek, Namibia and it is wholly-owned by Glencore
International AG (“GIAG”). GIAG is a wholly-owned subsidiary of
Glencore plc (“Glencore”). Glencore is not controlled by any firm
and is listed on both the London and Hong Kong stock exchanges.
Glencore’s activities include amongst others the worldwide production,
refining, transporting, storing and supply of metals, minerals, energy
products and agricultural products. Relevant to this transaction is that
Glencore, through its subsidiaries, is involved in the zinc and lead
market, as Glencore engages in the sales of zinc and lead metals
which are produced from concentrates processed through their
subsidiaries’ facilities as well as through arrangements with other
companies.
The primary target firm is Exxaro Base Metals Namibia (Pty) Ltd
(“Exxaro BMN”), a wholly-owned subsidiary of Exxaro Resources.
Exxaro BMN holds a 99.9% shareholding in Rosh Pinah Mine Holdings
(Pty) Ltd (“Rosh Pinah”) which holds a 4.25% shareholding in Rosh
Pinah Zinc Corporation (Pty) Ltd (“RPZC”) located in Namibia. Exxaro
BMN carries out zinc and lead ore mining and beneficiation through its
effective 50.04% shareholding in RPZC.
Proposed transaction
3] In terms of the proposed transaction, Glencore Finance (Bermuda)
Limited (“GFB”) and WILRU 134 will ultimately acquire 100% of the
shares in Exxaro BMN from Exxaro Base Metals and Industrial
Metals Holdings.
Post-transaction, WILRU 134 will own and control the entire zinc asset
portfolio in Namibia, in which WILRU 134 already holds a 30.05% non-
controlling interest prior to the transaction.
Upon implementation of the transaction, WILRU 134 will effectively
own 80.04% of the Rosh Pinah mine and related operations.
Rationale for the transaction
4] The rationale for the proposed transaction is that RPZC will add to
4] The rationale for the proposed transaction is that RPZC will add to
Glencore’s existing portfolio of zinc and lead concentrates, which
will provide future expansion potential and strengthen its position in
Africa.
Exxaro had the intention to divest its zinc asset portfolio in order to
concentrate on the coal and base metals industry instead. It was
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unable to sell Zincor in South Africa but was able to sell its
shareholding in RPZC which is the subject of this transaction.
Relevant markets and impact on competition
5] The proposed transaction does not constitute either a horizontal or
a vertical merger. Rather, it is a change to sole control over the zinc
asset portfolio in Namibia.
RPZC is a zinc and lead mine which until November 2011 supplied all
of its zinc concentrate output to Exxaro Resources’ zinc refinery,
namely Zincor which was located in South Africa. It was explained at
the hearing by Exarro that it had decided to dispose of its entire zinc
portfolio. Pursuant to this it had put the portfolio out on tender but had
not received a reasonable price for Zincor. The refinery was eventually
shut it down as it was unviable.1 Exxaro had engaged with the Dti
about its difficulties with Zincor at that time but this had not led to any
fruitful outcomes. The outcome of this is that RPZC no longer makes
any sales of zinc or lead into South Africa.
There is therefore no product overlap between the activities of the
merging parties in South Africa.
There are sufficient other global competitors in the market for zinc
production, such as Xstrata AG, Hindustan Zinc and China MinMetals
Corporation. BHP Billitin, Xstrata AG and Doe Run are amongst the
global competitors for lead production.
Public interest
6] The merging parties confirmed that there will be no adverse effect
on employment as a result of the proposed transaction 2 as there
are no South African employees relevant to this transaction. No
other public interest issues arise as a result of this transaction.
CONCLUSION
7] We conclude that the proposed transaction is unlikely to
substantially prevent or lessen competition in any relevant market.
Furthermore, the proposed transaction raises no public interest
concerns. Accordingly, we approve the proposed merger
unconditionally.
1 See page 544 of the record.
2 See page 552 of the record.
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____________________ 14 May 2012
YASMIN CARRIM DATE
Medi Mokuena and Andiswa Ndoni concurring.
Tribunal Researcher: Nicola Ilgner
For the merging parties: Werksmans
For the Commission: Rakgole Mokolo
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