JOHANNESBURG (miningweekly.com) – The Competition Tribunal has approved a request by South African industrial and base metals producer Zimco Group to lift certain conditions imposed by the Competition Commission in 2014, when it approved the merger of Zimco and lead anodes producer Atlantis Metals.
At the time of the merger, Zimco and Atlantis were the only exporters of lead anodes. This concerned the Competition Commission, which feared that the merger could create a monopoly.
The commission, therefore, approved the merger on condition that the companies’ supply to customers would not be affected. The conditions also stipulated that the Atlantis plant could not be relocated from Brakpan or to anywhere outside of South Africa and that there could be no retrenchments for two years after the merger.
However, in its request, issued on Tuesday, Zimco argued that Atlantis had been seriously affected by diversified mining major Glencore’s decision to close mines in Zambia and the Democratic Republic of Congo, as the general decline in the demand for commodities and the drop in the copper price had contributed significantly to Atlantis’s financial woes, causing the Atlantis plant to be placed on care and maintenance.
Zimco argued that, while Atlantis had been facing financial difficulties, a lot of money had still been put into the company. Zimco reiterated that the current financial conditions, which have reduced demand for commodities, have made it necessary to look at repositioning Atlantis to ensure its sustainability.
Zimco noted that moving Atlantis to Krugersdorp would lower costs but would result in retrenchments.
Therefore, the company believed it would make financial sense to relocate some of Atlantis’s operations outside of South Africa, as it would place the products closer to where there was demand. Zimco also assured the tribunal that it would continue to supply its South African customers.
Therefore, with the consent of the Competition Commission, the tribunal removed the restrictions on the relocations of the plant and confirmed that the retrenchments were not merger-specific.
The tribunal noted on Wednesday that the reasons for its decision would be provided at a later date.