Zimco plans to seek new home outside SA

SOUTH Africa’s leading producer of industrial and base metals, Zimco Metals Group, is preparing to relocate its manufacturing plant outside of the country after the Competition Tribunal yesterday lifted merger conditions imposed less than two years ago.

The tribunal agreed to amend the conditions it had imposed on the merger of Zimco and Atlantis owing to the lacklustre global commodity price environment, particularly that of copper and zinc, which has hurt the mining industry.

The original conditions included barring the relocation of the Atlantis’ manufacturing plant outside of the country from its Brakpan premises, and that there would be no retrenchments two years after the merger.

Zimco and Atlantis were South Africa’s only two producers of lead anodes, which are used in the production of copper through the electrowinning process. The Competition Commission was concerned that the merger would create a monopoly.

Financial difficulties

Zimco argued that Atlantis had been facing financial difficulties and that the tough economic environment had reduced the demand for its products. Zimco Group’s managing director, Wouter Verwey, said the company had requested a review of the conditions because the market environment had put a strain on the company.

“With the drop of commodity prices, mining houses have had to cut back on production, meaning that the demand for our products has dried up over the past three months,” Verwey said after the hearing.

“The company had a facility in Krugersdorp, which would give local customers choices.”

He said the company had to find a property outside of South Africa, and were “looking for premises” in Africa.

The merged company was expected to supply global commodity giant Glencore’s copper mines in Zambia and the Democratic Republic of Congo, which consumed the majority of its lead anodes.

However, Glencore suspended production from the mines last year.

Mining houses have cut production across the board as the decline of global metal prices, including that of copper and zinc, due to low demand from China has weighed heavily on profits.