PERTH (miningweekly.com) – The Australian Competition and Consumer Commission has raised concerns around the proposed acquisition of mining services provider Cougar Mining by Bis Industries Holdings.
Both Cougar and Bis provide support services to the coal mining industry, including the hiring out of underground longwall relocation equipment and other specialised mining equipment.
ACCC chairperson Rod Sims this week said that a number of mine operators have raised strong concerns that the proposed acquisition would reduce the number of significant suppliers of longwall relocation equipment hire from two to one.
“In our opinion this would likely lead to higher prices and reduced quality of service,” Sims said.
He noted that the ACCC’s preliminary view is that the threat of new entry or expansion is unlikely to significantly constrain a combined Bis-Cougar.
“There appear to be high barriers for a company seeking to enter or expand into the supply of longwall relocation equipment hire, including high capital costs and long lead times in acquiring the equipment,” Sims said.
The ACCC also considers that self-supply of longwall relocation equipment by mine operators is unlikely to significantly constrain a combined Bis-Cougar.
“While some mine operators own some pieces of longwall relocation equipment, it doesn’t make commercial sense for most mine operators to own a full suite of longwall relocation equipment. This is due to the high up-front purchasing costs, costs of maintaining the equipment, and the relative infrequency for the need for this equipment.”
The ACCC also examined the impact of the proposed acquisition in the supply of run-of-mine equipment hire services, and its preliminary view is that the proposed acquisition is unlikely to raise competition concerns in this area.
The watchdog’s final decision is scheduled for October 24.