Empowerment is at core of IDC's beef with Anglo
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Kumba issues go further than competition
Resources Correspondent
ANGLO American's plan to build up a 49% stake in Kumba Resources seems to be opposed by the Industrial Development Corporation (IDC) on the basis that the IDC wants to see Kumba controlled by a black empowerment grouping.
On the third day of the Competition Tribunal hearing into Anglo's proposal to build up a stake in Kumba, it emerged the issue of empowerment involvement was at the core of the IDC's objections to the Anglo move.
During cross-examination of Anglo CEO Tony Trahar by Alan Nelson, counsel for the IDC, yesterday it became clear the IDC was keen to see a black economic empowerment grouping control Kumba and not Anglo.
Nelson also indicated the IDC, which has a 14% stake in Kumba, wanted an equity stake of 26% in Kumba to be sold to an empowerment party either before or immediately after Anglo raised its interest in Kumba to a controlling stake.
The IDC appeared to be contesting Anglo's plans on black economic empowerment issues rather than competition ones.
But in its decision, the Tribunal has to consider issues competition issues as well as issues deemed to be of public interest. In SA this could include the issue of empowerment.
Trahar said Anglo had discussed empowerment issues with government and indicated that there would be possibilities at Kumba's iron ore, zinc and mineral sands operations.
"We are in the process of negotiating a (memorandum of understanding) with the Tiso Consortium," Trahar said.
Tiso is an empowerment grouping.
An empowerment scenario envisaged for iron ore would involve two empowerment parties, said Trahar.
The IDC opposition seems to conflict with the view of Trade and Industry Minister Alec Erwin.
In his evidence Trahar said Anglo had government backing to build an initial controlling stake in Kumba of up to 49%.
It was also made clear to Anglo that government would like to see Kumba remain as listed on the JSE Securities Exchange SA.
Such a deal may be similar to the one that Iscor which is now chaired by Khaya Ngqula and in which the IDC has a stake of nearly 9% made when Netherlands-based steel company LNM increased its stake in Iscor to 47% by means of a controversial partial offer to minority shareholders.
Anglo did not rule out the possibility of building up this stake further in the future.
Anglo said during the course of this year that it was indicated to the company that government favoured a strategy involving two key players in the sector.
This strategy would be based on Kumba's operations and reserves as well as on those of smaller-scale iron ore producer Assmang.
There seemed to be some confusion about Anglo's application to the Tribunal for approval to build up a controlling stake in Kumba. And the IDC questioned why Anglo went ahead with its acquisition of a stake in Stimela when its understanding was that the Tribunal hearing was to decide whether this acquisition could take place.
Anglo said yesterday that its application to the Competition Tribunal for control of Kumba had not changed since it was originally submitted in June 2002.
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