Glencore and Xtrata merger approved with conditions : Tuesday 22 January 2013

Glencore and Xtrata merger approved with conditions

Tuesday 22 January 2013 16:54

Glorious Sefako

The Competition Tribunal's approval of the Glencore and Xtrata merger can be seen as a sign of confidence in the mining sector.

The Competition Tribunal's approval of the Glencore and Xtrata merger can be seen as a sign of confidence.(SABC)

South Africa has given the green light to the merger between commodities giant Glencore and mining company Xtrata but it is conditional.  It can only retrench after two years and this figure is limited to 180 employees.

The deal is yet to be approved. The R 270-billion deal was keenly watched by international business after Walmart South Africa's anti-trust legislation was closely scrutinised.

Eskom initially challenged the merger at the Competitions Tribunal. It was concerned about the cost of coal rising as Eskom depends on coal for electrification. The utility later backed down and no reasons were given.

Unions extracted a 24-month no-retrenchment agreement. The National Union of Mineworkers, Lesiba Seshoka, says: “They have agreed that there will be no retrenchments, even 2 years after the Chinese have formalised this merge, but also in addition to that we have agreed that should there be retrenchments in the future, it will be limited to 180 people, and if that happens, they will have to pay-out R10 000 to each worker."

The mining industry has been in negative PR terrain recently. First Marikana, then Amplats move to cut 14 000 jobs to stabilise the platinum sector and Harmony Gold's planning to cut its workforce.

So the Tribunal's green light could be seen as a sign of confidence in this sector. Researcher at Imara SP Reid Stephen Meintjies says: "The fact it has been approved means you have got two of the world's largest companies happy, being given permission to merge in South Africa and do business in South Africa, so in that sense it is positive, it's a business as usual kind of decision, and that is good."

The Tribunal says its reasons will be announced later. Xstrata is one of the world's largest coal miners.

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