Xstrata Alloys has acquired a controlling stake in the African Carbon Group (“ACG”), a char producer situated in the Mpumalanga province, South Africa from The Standard Bank of South Africa, Anker Coal and Mineral Holdings South Africa, and various other South African shareholders. The value of the net assets acquired as at the transaction’s effective date is approximately ZAR56 million or USD9 million.
The acquisition of ACG delivers on Xstrata Alloys’ strategy to secure its supply of char, a key input into the ferrochrome manufacturing process. ACG sold approximately 271,100 tonnes of char and associated by-products during the first half of 2004 and will satisfy a significant proportion of Xstrata Alloys’ current reductant requirements. ACG also benefits from a number of long-term coal supply contracts that will ensure a future supply of char for existing operations and planned increases in production. The acquisition has been approved by the South African Competition Board.
Peet Nienaber, CEO of Xstrata Alloys, commented: “The acquisition of ACG is an important step in securing our supply of a key input for ferrochrome production. We have already identified synergies with Xstrata’s char operation at Witbank and expect to improve the overall cost performance of ACG’s operations, while substantially increasing production.”