The Competition Tribunal yesterday prohibited the merger involving the sale of Sasol South Africa’s sodium cyanide business to a Czech-based producer of sodium cyanide, Draslovka Holding, through its local subsidiary, Draslovka (South Africa).
Sasol announced in July 2021 that it had agreed to sell the business to the global cyanide expert for R1.46 billion, subject to regulatory approval.
At the time, Sasol said the transaction was part of Sasol´s ongoing, strategy-aligned, asset divestment programme.
“Sasol has made progress on its expedited review of the business to consider how it can be most effectively positioned to be sustainable in a low oil price environment. Consistent with this approach, the expanded asset disposal process has yielded good interest in relation to a number of assets, despite the macro environment uncertainty,” Sasol president and CEO Fleetwood Grobler said at the time.
Draslovka describes itself as a family-owned private company focused on the production of speciality chemicals and proprietary manufacturing technologies, with over 100 years experience of operating in the hydrogen cyanide (HCN) production and chemistry sector.
The Tribunal said yesterday that sodium cyanide, a chemical compound commonly used in the extraction of precious metals like gold and silver, was an important input for the gold mining firms operating in South Africa.
“Sasol has a monopoly position in the production of liquid cyanide in South Africa and the gold mining sector is dependent on Sasol for the supply of liquid cyanide, according to the Competition Commission. In terms of the proposed transaction, Sasol would have supplied certain key inputs required in the production of sodium cyanide to Draslovka,” it said.
Matebello Motloung, group media relations manager at Sasol, said it had been informed that the Competition Tribunal had upheld the prohibition of the divestment of its cyanide business to Draslovka.
“No reasons have yet been provided for the decision,” Motloung said.
She said that at this stage, the business would remain owned by Sasol and there would be no changes to any business activities and operations as a result of this decision.
“We will consider next steps once we receive formal notification of the reasons for the decision,” she said.
Gold mining firms Sibanye-Stillwater and its subsidiary, DRD Gold, Pan African Resources and Harmony Gold Mining were granted leave to participate in the Tribunal proceedings, following their applications for intervention.
The Tribunal heard oral evidence from the merger parties, the Competition Commission and the intervenors, including factual and economic expert evidence, during the merger hearing held in April and May. Thereafter, the parties made further written submissions to the Tribunal, the last of which was received earlier this month.
The Tribunal said a more detailed statement would be issued when its reasons for its decision were issued.
The Competition Commission prohibited the merger in November 2021 on the grounds that, among other things, it would probably result in a substantial prevention or lessening of competition due to post-merger price increases, which would be detrimental to customers, that is, gold mining firms.
The Commission also found that the proposed merger would have a substantial negative effect on the public interest given its effects on the South African gold mining sector.
The merger parties, thereafter, filed an application for consideration to the Tribunal based on several grounds, including that the Commission had not considered the significant efficiencies and public interest benefits arising as a result of the proposed transaction.
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