Competition Commission halts sale of silica mine

Petmin had announced the sale of SamQuarz to Thaba Chueue Mining for R259 million in September 2011, subject to approval from the Competition Commission and the Department of Mineral Resources.

"On 13 January 2012 the Competition Commission notified Petmin that it would not authorise the sale," read the company statement. "The Commission's decision relates to the strategic importance of SamQuarz as a supplier to the producers of ferrosilicon and silicon metal in South Africa." Petmin said it was studying the commission's decision and would consider its options in consultation with advisors and legal counsel. The company added that the decision does not impact on Petmin's ability to deliver on its strategy. "Petmin will advise shareholders in due course as to how it will proceed in light of the Commission's decision," read the statement.

According to Miningmx.com the Competition Commission ruled that allowing the sale of Petmin's SamQuarz mine to Thaba Chueu would remove an independent silica supplier from the market and enable the buyer to control the critical input of its downstream competitors. In an emailed response to Miningmx's questions, Hardin Ratshisusu, acting manager of mergers and acquisitions for the Competition Commission, said South Africa's downstream markets for ferrosilicon, silicon metal and silicon carbide were highly concentrated. "The acquisition of SamQuarz by Thaba Chueu would mean that companies that are currently customers of SamQuarz and who directly compete with Thaba Chueu in downstream markets would become reliant on their direct and potential competitor for the supply of critical input," Ratshisusu said.

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