Lanxess looking to sell its South African chrome chemical mine

Lanxess is in the final stages of selling its 75% equity interest in its chrome chemical ore business centered in South Africa. The division, which includes its chrome mining and beneficiation facilities is thought to be considering bids from the final round of companies, which reportedly include Glencore, Tharisa and Afarak along with some investment companies.

Lanxess said it wants to focus on its specialty chemical business and the chrome division accounts for less than 1% of its turnover.

As justification, the company is exiting its chrome chemical site in Argentina (Zarate). Furthermore, the chemical-grade ore merchant market has significantly increased relative to history. Thus it is no longer necessary to own a mine in order to secure a secure source of feed for downstream manufacturing operations.

Lanxess will also sell its shareholder loan to the division as part of the transaction; the shareholder loan balance was ZAR779-million as of Oct. 31, 2017.

The new owner will get 100% of the marketing rights to the chrome ore produces, save for any agreement between Lanxess and the successful bidder regarding chemical-grade product to be supplied to Lanxess’ South African chrome chemicals business. A proposed supply agreement will be discussed with the new owner.

The BEE 26% holding in the division held by Diriem is not part of the deal. Direng Investment holds a 51% interest in Dirlem with the remaining 49% held by Rustenburg Chrome Employees.

The Rustenburg mine has nine significant chromite layers, LG5, LG6, LG6a, LG7, MG1, MG2, MG3, MG4 and MG4a. TheLG6a and LG6 is currently being underground mined which a highly consistent Cr203 grade of 40-42% (before internal waste dilution). The deposit can also be mined using opencast when underground mining stops.

There is also the option of treating 7.1-million mt of tailings.

The LG and MG represent the lower grade and middle grade of the critical zone of the Bushveld Igneous complex deposit.

The MG1, MG2, MG4 and MG4a will be mined starting in 2020.

Lanxess will keep its Newcastle and Merebank sodium dichromate and chrome tanning salts operations in South Africa.

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Wiseman Taban

How can Lanxess sell the mine while there is still a dispute between the Company and the Employee representatives NUM for ESOPS and the provident fund that was deducted unlawfully from officials?