Sasol will not be able to sell its profitable sodium cyanide business to the South African arm of Czech Republic-based producer of sodium cyanide, Draslovka Holdings.
This as the Competition Tribunal on Wednesday issued an order prohibiting the intermediate merger between the two parties, in line with prior recommendations made by the Competition Commission which in 2021 warned the transaction would have significant pricing effects that would disadvantage South African gold mining firms.
“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,” the Tribunal noted in its statement.
Sasol announced its plans to sell the business to Draslovka in July 2021 for R1.46 billion. However, once the CompCom announced its rejection of the deal later that year, Sasol protested the move, saying that the sale was in the interest of its local cyanide business, employment and customers. Sasol argued that Draslovka would improve the business and further enhance competition.
“Its plans for the business include expansion and capital investment, which will bring several significant benefits to the country – including significant foreign investment, employment, economic upliftment and long-term stability of supply for the mining industry,” Sasol had said, motivating for the deal.Apart from the CompCom’s submissions, the Tribunal says it also engaged the merging parties, economic experts and gold miners to seek their views on the deal before reaching its decision.