ArcelorMittal South Africa says allegations that it abused its market dominance in the purchase of iron ore from Assen Mine to acquire an equity stake in Manngwe Miing ,are not true.
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Manngwe Mining has alleged an abuse of monopsony power by ArcelorMittal South Africa (AMSA) — an attempt by a dominant buyer to force ownership of a supplier out of the hands of its shareholders - but the steel producer says these claims are without merit.
A monopsony is a market dominated by a single powerful buyer — the mirror image of a monopoly, where a single seller dominates. AMSA was the sole buyer of the iron ore produced at Manngwe’s Assen Iron Ore Mine near Brits, in the North West.
Manngwe Mining CEO Mutheiwana Rambuwani said on Friday in a statement that AMSA used its monopsony position to withhold and ration purchase orders, and to make their resumption conditional on Manngwe surrendering equity in the business — pressure that ultimately forced the Assen operation to cease mining.
AMSA, in response to Business Report questions over the weekend, said its relationship Manngwe Mining “regrettably, became increasingly difficult over time due to a range of commercial and operational challenges,” including “inconsistent supply performance, quality concerns, pricing issues, governance instability and uncertainty regarding long-term supply sustainability.”
The steel producer said in spite of these issues, the group had engaged in discussions with Manngwe for an extended period precisely because AMSA was attempting to find a commercially sustainable path forward and to assist in resolving these concerns, “rather than taking steps (as it would have been entitled to do) that would have had an adverse effect on Manngwe Mining.”
Manngwe Mining is a 100% black-owned mining company with several mining interests, of which the Assen Iron Ore Mine near Brits in the Northwest Province is one. The company has confirmed that legal processes underway and further filings expected before the Competition Tribunal.
Manngwe Mining CEO Mutheiwana Rambuwani said, in a statement, AMSA’s conduct undermined over a decade of investment, development and community-centred growth — and was being pursued by leveraging AMSA’s power as effectively the only buyer of the mine’s output.
“To make the resumption of orders conditional on our parting with equity, placed unsustainable pressure on the business. We believe that conduct is unfair, and not in line with the spirit of the Competition Act and the protections it affords suppliers — and it is the reason we have approached the Tribunal,” said Rambuwani.
ArcelorMittal said its procurement decisions are based on various commercial and technical considerations, including sustainability and transformation.
“AMSA has supported Manngwe Mining with financial, commercial and technical support (since 2016). (AMSA) did not coerce… any representative of Manngwe Mining into signing any documentation,” it said.
The steel producer said its procurement decisions were also based on pricing competitiveness, quality, reliability of supply and operational performance, as well as the promotion of transformation and B-BBEE.
Manngwe Mining has sought interim relief from the Competition Tribunal, with AMSA expected to file its responding affidavit this week.
Manngwe Mining maintains that the conduct it has experienced — the use of monopsony power to extract equity — amounts to an abuse of a dominant position under the Competition Act 89 of 1998, and is not only commercially unreasonable but also damaging to the broader ecosystem that relies on the mine’s continued operation.
“Our foremost concern is the people who depend on this enterprise — our employees, our suppliers, our shareholders and our community. They built the Assen operation into the going concern it is today. Those are the livelihoods now at stake, and safeguarding them is our responsibility,” Rambuwani said.
Manngwe Mining said the reputational impact of the dispute had also created uncertainty among the workers, families and suppliers whose depend on the Assen operation, and within the surrounding communities of Rasai and Kwaarikraal villages.
“We continue to believe a negotiated resolution is achievable — one that keeps Manngwe Mining’s Assen Iron Ore Mine in the hands of its current shareholders while we continue to supply AMSA on fair commercial terms, as we always have,” Rambuwani said.
ArcelorMittal said its commercial and operational support to Manngwe Mining had included financial assistance, accelerated payment arrangements, technical engagement and "ongoing indulgences" to enable Manngwe Mining to achieve better performance despite repeated operational and performance-related concerns.
The financial assistance included making available a loan on favourable payment terms. Further, the arrangements included engagements on long-term supply security and addressing financial exposure.
“Alternatives were explored to find a solution for the outstanding loan owed by Manngwe Mining and to support the company with agreed volumes and it was agreed that certain options be granted to AMSA in the Supply Agreement, based on the conclusion of option agreements with the shareholders of Manngwe Mining,” it said.
“The suggestion AMSA sought to... destroy Manngwe Mining is therefore entirely inconsistent with the factual history of the relationship.”
BUSINESS REPORT