The Competition Tribunal has approved a transaction whereby natural resources investor International Resources Limited (IRL) South Africa will acquire the openpit Mapochs mine, in Mpumalanga.

The mine supplied ore for the production of steel and vanadium before steel producer Evraz Highveld Steel went into business rescue in 2016.

In July 2018, the Competition Commission prohibited the transaction between the merger parties because it was concerned that the merger was likely to foreclose Vanchem Vanadium Products from sourcing vanadium-bearing ore from the Mapochs mine.

The merger parties subsequently applied to the tribunal to have the commission’s prohibition of the proposed merger reconsidered. First Vanchem, then the Minister of Trade and Industry at the time, and then Highveld intervened in the merger.

Before the matter could be heard on its merits, Vanchem was ultimately bought out by Bushveld Minerals and its concerns about the supply of vanadium from the Mapochs mine fell away.

This addressed the commission’s initial foreclosure concerns. Thereafter, the merger parties, the Minister and Highveld reached agreement on a set of proposed conditions that address their prior competition and public interest concerns.

IRL, as the acquiring party of Mapochs’ movable and immovable assets, is required to support the local community and work to create jobs at, and associated with, the mine.

On the basis of an ore supply agreement coming into effect, IRL will ensure a minimum of 200 direct and indirect employment opportunities within the Mapochs mine and the surrounding area within three years of the merger approval date.

The tribunal ordered that this minimum level of employment be maintained, and, where commercially feasible, enhanced throughout the operation of the mine.

IRL has committed to invest in the Mapochs mine to ensure that it is expeditiously refurbished and becomes fully operational and to develop resources associated with the mine.

IRL will invest an additional R160-million into the mine and associated infrastructure within three years from the merger approval date.

This is in addition to any purchase price or consideration paid and any amounts already paid or expended by IRL relating to the mine.

Moreover, IRL has confirmed its willingness to sell the ore produced by the mine to local beneficiators, such as Highveld or any future new market entrants.

The ore supply agreement will be concluded with Highveld as a requirement for the approval of this merger. Among others, the agreement provides for guaranteed minimum volumes of ore to be supplied to Highveld, at a competitive price, as and when the mine becomes operational again.

The conditions also cater for the potential scenario where other domestic beneficiators of the ore enter the market.

They will be supplied with ore on fair and reasonable terms after the volume commitments in terms of the ore supply agreement have been met. IRL shall afford local beneficiators a right of first refusal to acquire ore from the Mapochs mine and ensure that they are afforded reasonable and sufficient opportunity to access the ore and/or output of the mine.

However, IRL may establish and invest in its own local facilities and/or operations aimed at beneficiating the ore.

IRL has been tasked to provide the Trade, Industry and Competition Minister and the commission with a detailed report and affidavit regarding compliance with the conditions every six months for three years, and thereafter annually for another two years.