South African Government and Diamond Miners Back Anglo's Rejection of Xstrata’s Proposed Merger
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24.06.09, 11:00
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Mining
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According to Mining Weekly, the National Union of Mineworkers (NUM), the Solidarity labor union and South Africa's new Mining Minister have all backed Anglo American’s outright rejection of diamond miner Xstrata’s “merger of equals” plan.
NUM stated that the union opposes all forms of mergers, which, in its experience, invariably resulted in “massive” retrenchments. Mining Minister Susan Shabangu noted that the South African government was opposed to the proposed deal, adding that monopolies cannot be promoted in South Africa.
Mining Weekly quotes Solidarity spokesperson Jaco Kleynhans, who claimed that diamond miner Xstrata's proposal was not in the interests of the 115,000 employees of the two diamond mining groups.
Kleynhans warned: "In the short term, the only winners in this type of takeover are the bankers and lawyers. In addition, the company runs the risk of severely damaging its share price in the long run if their dirty laundry is aired in public.”
Giant diamond miner Anglo rejected Xstrata's merger-of-equals proposal earlier this week after criticizing its terms and implying that Xstrata’s assets were inferior to its own.
In response, Xstrata expressed its surprise at Anglo's swift dismissal, in view of the potential synergies and cost savings such a merger could bring.
Anglo CEO Cynthia Carroll is due to visit South Africa tomorrow. Mining Department DG Sandile Nogxina has reportedly requested a meeting with the CEOs of both of the diversified mining companies in order to determine the potential impact a merging of the two diamond mining companies would have on the South African economy.
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By: Rachel Lieberman, Israel Diamond Industry Portal
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