Iscor changes its mind on Anglo's Kumba purchase
May 27, 2003
By Ann Crotty
Johannesburg - Iscor has notified the competition authorities of its concerns about Anglo American's proposed acquisition of Kumba - almost a year after it said that it had no concerns about the transaction.
The contents of Iscor's letter to the competition authorities were referred to at the long-awaited Competition Tribunal hearing into the transaction, which started yesterday, almost nine months after it was originally due to be heard.
The delay was largely attributable to an application for intervention brought by the Industrial Development Corporation (IDC) and keenly contested by Anglo.
Iscor's letter was sent to the Competition Commission and tribunal just two weeks ago. It expressed concern about the possibility of the merger adversely affecting the price and quantity of iron ore that Iscor buys from Kumba, a process described as foreclosure.
It was also concerned that Anglo, through its control of Kumba, would get access to confidential information about Iscor's activities
.
In July last year, when the commission was investigating the proposed transaction, it approached Iscor, which is Kumba's biggest South African customer, to establish whether Iscor had any concerns.
At that stage Iscor said it had no concerns about foreclosure as its supply arrangement with Kumba was protected by a long-term contract.
Under this contract, Iscor paid cost plus 3 percent for iron ore supplied by Kumba.
Iscor also indicated confidentiality was not an issue because Anglo was already a shareholder in Kumba and had had access to Kumba documents for some time.
Last August the commission recommended unconditional approval of the transaction.
Late last year Iscor appointed Khaya Ngqula as its chairman, replacing Hans Smith. Ngqula is also the chairman of the IDC and is thought to be the driving force behind the IDC's efforts to intervene in the tribunal's hearings on Anglo's acquisition of Kumba.
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