The ACCC has raised preliminary competition concerns about Moly-Cop’s proposed acquisition of Donhad.
Moly-Cop and Donhad are the only domestic manufacturers of forged steel grinding media in Australia. These products are primarily used by the mining industry to crush ore to a fine powder, enabling minerals to be extracted.
“The ACCC is concerned that Moly-Cop would emerge as the only domestic supplier with a market share of well over 50 per cent. Our preliminary view is that the proposed acquisition may substantially lessen competition for the supply of grinding media in Australia,” ACCC Chairman Rod Sims said.
“Many users of grinding metal are concerned. Their concerns are centred around the loss of strong competition said to exist between Moly-Cop and Donhad."
“We are investigating the extent to which customers would be able to switch to using imports in response to any attempt to increase prices. Market feedback on the competitiveness of imports has been mixed, but we do understand significant volumes of grinding media are already being imported,” Mr Sims said.
“Some of the imports are high chrome, rather than traditional forged steel. We are investigating the extent to which high chrome grinding media is a close substitute. We will also be looking at whether anti-dumping duties have affected customer purchases of imports from China.”
“Further, many of the imports are from a single supplier, ME Elecmetal. We need to assess the viability of imports from other players as well, because if there is only one substantial importer of forged steel grinding media, it may not be sufficient to preserve competition,” Mr Sims said.
The ACCC invites submissions from interested parties in response to the Statement of Issues by 21 December 2017. The ACCC’s final decision is scheduled for 1 March 2018.
Background
Moly-Cop has one Australian manufacturing facility in Newcastle, NSW. Donhad has three Australian-based manufacturing facilities located in Newcastle, NSW; Townsville, QLD and Perth, WA.
Moly-Cop is the world’s largest manufacturer of grinding media. Moly-Cop was formerly part of Arrium Limited’s global mining consumables business. On 3 January 2017, Moly-Cop was sold to American Industrial Partners, a private equity firm based in New York, USA.
Donhad is 100% owned by Valmont Industries Inc., a public company based in Omaha, Nebraska, USA.
Grinding media are typically balls or rods of iron, steel, chromium and/or high alloy. Grinding media are primarily used by the mining industry to extract and process minerals such as copper, gold and iron ore. When placed in a mill, grinding media crush ore to a fine powder, enabling the desired mineral (such as copper or gold) to be extracted from the waste rock.