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
Concurring: N. Manoim, P. Maponya
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