Platinum group metals (PGMs) miner Northam Platinum is requesting the Competition Tribunal to accept its request to intervene in and assist in the tribunal processes related to fellow PGMs miner Impala Platinum’s (Implats’) proposed buyout of Royal Bafokeng Platinum (RBPlat).

As reported by Mining Weekly in May, Implats and RBPlat informed their shareholders that the proposed deal whereby Implats intends to acquire all the shares in RBPlat it does not already own, was likely to be delayed.

The transaction had received the go-ahead from the Competition Commission and Implats and RBPlat had started processes before the tribunal.

However, Northam made an application to intervene in the tribunal process.

Presenting in a hearing to the tribunal on June 8, counsel for Northam indicated that the company had identified several areas where it believes it could be of assistance to the tribunal in making its decision on whether or not to approve Implats’ buyout of RBPlat.

This includes that the commission’s investigation into the proposed merger used the wrong market definition, and the vertical and horizontal effects of the merger, Northam argued.   

Northam elaborated that the investigation got both the product and geographic market definition incorrect on this transaction.

Further, it pointed out that the investigation was concluded under considerable time pressure, meaning that it was incomplete.

Northam said this put the tribunal in a difficult position, as it has been presented with a recommendation from the commission that has “fundamental errors, because of market analysis mistakes, horizontal and vertical effect mistakes, and lack of a complete record of relevant information that needs to be addressed”.

Northam also said the merger would be anti-competitive and that smelting capacity may be reduced.

Implats, presenting its side, said there was no evidence to back Northam’s claims.

Rather, it said, there were plans to increase smelting capacity, and without the merger, closures would have happened instead.

Meanwhile, Northam posited that as an intervenor, it can assist and show the limited alternatives in the primary concentrate market, as well as the actual dynamics in the markets, so that these concerns could possibly be conditions that the tribunal could impose on any approval of transactions.

It also mentioned public interest concerns that arise from the proposed merger. The company in its submission to the commission and its appeal to the tribunal identified at least five public interest factors that it believed it could be of assistance to the tribunal with.

This includes the impact of the removal of RBPlat from the industrial sector and on the region in which these resources are located.

Moreover, in terms of employment, it pointed out the adverse conditions of having that much labour concentrated in one area.

It also said the issue of how the proposed employee stock ownership plan (Esop) would be implemented was an employment issue.

Northam said that, as a shareholder with a 34% interest in RBPlat, its ability to understand and endorse any conditionality around changes to who holds the shares and how these are held in the company is an interest that requires the company’s intervention.

The company said that from the tribunal, it is seeking the “full suite” of procedural rights, so that it can provide assistance to the tribunal.

It is also seeking costs of this counsel.

Northam asserted that, as a market participant and miner that provides smelting services to other junior miners, and as a customer of Implats, it is uniquely placed to provide knowledge into the bargaining relationship between junior miners and the big three PGMs companies in the country for smelting services.

Implats, meanwhile, urged the tribunal to be cognisant of the motive behind Northam’s application to intervene. It said that elements of the appeal show that Northam is trying to delay the proceedings so that it can submit a takeover bid of its own.

Northam, however, emphasised that it had acknowledged any interest it might have in an opposing bid, but that this was not the motive behind its application to the tribunal.

Rather, this would be a separate issue, it said, noting that it did not insist that the tribunal hears and considers these two matters together.

It urged the tribunal to therefore not let this colour its decision, and to consider its intervention appeal in isolation.

Implats urged the tribunal to act expeditiously, noting that there was an open public offer, which was, in its nature, time-sensitive.

Northam retaliated by urging the tribunal not to disregard its statutory requirements because of Implats’ “impatience”.

Countering Northam’s claims on market structure change, Implats said following the takeover, its share of the market would increase from 17% to 20%, a three percentage point increase, which it said was too minimal to actually change the structure of the market.

This was countered by Northam, which posited that owing to the market being dominated by three majors, any changes in ownership would have implications on market structure.

Implats also said that Northam’s theories of harm were not backed up by any evidence.

The tribunal would now consider both parties’ arguments and revert with a decision in due course.