150509Suppliers of construction materials into the building industry are taking strain because of the collapse of the residential housing market. Buildmax, which has been repositioned through two major acquisitions as an opencast coal mining contract and supplier of construction materials.photo Supplied

Johannesburg‚ Dec 6 (I-Net Bridge) - The Competition Tribunal will next week hear the proposed merger between two multi-national mining firms‚ Glencore and Xstrata.

Glencore currently holds a 33.65% stake in Xstrata but‚ through this transaction‚ Xstrata will become a wholly-owned subsidiary of Glencore.

Glencore has world-wide activities in mining‚ smelting‚ refining‚ processing‚ marketing and trading of metals and minerals‚ energy and agricultural products. Glencore markets physical commodities that it either produces internally or purchases from third parties for onward sale to industrial consumers. Glencore also provides financing and logistics to producers and consumers of commodities.

Xstrata is active in various mining industries‚ including thermal coal mining‚ through its shareholding in several mines.

According to the merging parties‚ this transaction offers several mutual benefits such as:

- an expanded operational footprint including positions in the next major regions for mining investment‚ such as the African copper-belt‚ Kazakhstan and South America;

- greater strategic and financial flexibility; and

- a combination of Glencore's global commodities marketing business with Xstrata's world-wide metals and mining assets operations.

Eskom‚ a major consumer of coal‚ has raised concerns with the merger and has been granted the right to intervene in the upcoming hearing. The National Union of Metal Workers‚ NUMSA‚ has also been granted the right to intervene.

The merger has been notified in several jurisdictions throughout the world including the European Union‚ the US and China. The parties have already received unconditional approvals for the merger in seven countries including Canada‚ Japan and Brazil.

The Competition Commission assessed the merger and concluded that although the transaction was unlikely to cause a substantial lessening of competition‚ it nevertheless raised public interest concerns because the merging parties intended to retrench a number of employees. The Commission has recommended that such retrenchments be limited to a maximum of 180 employees‚ being 80 skilled employees and 100 semi-skilled and unskilled employees.

The Commission further recommended that the retrenchment of the 100 semi-skilled and unskilled employees may only take place after a period of 2 years from the approval of the merger and that a training fund be set up for this group of employees.

Next week‚ from 10 - 14 December‚ the Tribunal will hear evidence and testimony from several factual witnesses and economic experts from the merging parties and the intervening parties. Thereafter the Tribunal must decide whether to approve the transaction‚ approve it with conditions or prohibit the merger outright.

-I-Net Bridge