Mining merger appeal is to be heard by the Competition Appeal Court


The Competition Appeal Court is to hear an appeal by two mining companies, Andalusite Resources and Imerys South Africa, who are objecting to the Competition Tribunal’s decision to prohibit the merger of the two companies on the grounds that it would “substantially prevent or lessen competition” in the relevant sector both locally and globally. 

The companies are the only miners and suppliers of andalusite in South Africa, part of an alumina-silicate group of compounds used in high temperature industrial processes. Locally and internationally andalusite is largely used by steel producers.

The Competition Commission prohibited the merger in April 2015 after an investigation, and the merging parties then referred the matter to the Tribunal.

The Commission had received numerous concerns from both producers and end-users of andalusite based refractories regarding the effects of the proposed merger. In particular, producers and users were concerned that, as a result of the proposed merger, they would be deprived of competitive choice between Imerys and Andalusite Resources for andalusite, and that the merged entity would increase the price of andalusite locally or increase the amount it exported.

There are currently two main andalusite deposits being mined in South Africa, one near Burgersfort in eastern Limpopo and the other at Thabazimbi in western Limpopo. Imerys, owned by French company Imerys Refractory Minerals Glomel SA, has mines and plants at both these deposits and Andalusite Resources at the Thabazimbi deposit. 

The Tribunal rejected argument by the two companies that the absent the proposed merger the two companies would become capacity constrained and raised concerns that the merger could be used to control availability of andalusite in the market. Andalusite Resources (AR) and Imerys are by far the largest suppliers of andalusite globally and AR has more than half of SA’s market.

“Not only has Imerys reduced its andalusite production capacity by closing down its Krugerspost mine in South Africa, it has also closed its Yilong mine in China and now intends taking over its only competitor in South Africa, “ the Tribunal said in its reasons.

It said barriers to entry in the mining, processing and sale of andalusite in South Africa is high and small firms lacked the capacity, resources or bargaining power of their larger competitors to “respond to the significant anti-competitive effects of the proposed merger”.

“The proposed acquisition will deprive the users of andalusite and andalusite-based refractories in South Africa of the unique functional and price benefits of a scarce natural resource that has historically benefitted them in their respective local and international markets in which they compete,” said the Tribunal.

The Tribunal said it had considered certain behavioural conditions proposed by the merging parties, but in the end found “these proposed conditions in our view are inadequate and do not address the structural market change resulting from the proposed transaction”.  

The matter will be heard by the Competition Appeal Court on 15 December, 2016.


Issued by:

Chantelle Benjamin

Communications: Competition Tribunal   

Tel (012)394 1383                                     

Cell: +27 (0) 73 007 5603  

Twitter: @comptrib                                       



On Behalf Of:

Lerato Motaung                                                   

Registrar: Competition Tribunal                                        

Tel: (012) 394 3355                                             

Cell: +27 (0) 82 556 3221