ASSORE gave a withering assessment of its legal battle with African Rainbow Minerals (ARM), saying in a statement on Wednesday that the Patrice Motsepe mining group had hijacked decision-making in their joint venture company, Assmang.
Assmang, an iron ore and manganese miner, is owned 50:50 by Assore and ARM. Evidence that relations were strained emerged on Tuesday when ARM said it would defend itself against legal action filed against it by Assore.
Assore chairman Charles Walters said in a statement that ARM had “appropriated to itself decision-making powers it does not possess to the exclusion of Assore and the relevant Assmang decision-making bodies”. Walters did not provide details of the decisions ARM was allegedly commandeering.
He described the dispute as arising from “differing interpretations of the respective rights and obligations of Assore and ARM under Assmang’s shareholders’ agreement”. Assore signalled its surprise at the turn in relations after “many years of equilibrium”.
Assore has a long association with Assmang, which was founded in 1935 by Guido Sacco and former mining house Anglovaal. Guido Sacco’s son, Des Sacco, was chairman of Assmang for many years. His son, Patrick Sacco, is currently company chairman.
Assore's Walters said it preferred to resolve the matter “amicably” and that negotiations were continuing despite the court filings.
“Assore has therefore reluctantly approached the courts for, among other matters, orders to restore the power equilibrium agreed to under the shareholders’ agreement, and to address certain decisions imposed by ARM on Assmang that Assore believes are inconsistent with the agreed governance arrangements,” Walters said.
While details of the dispute are unknown, it is logical to assume that Assmang’s assets are a source of contention as the joint venture's contribution to ARM’s headline earnings fell 42% to just over R2bn in the 12 months ended June. That represented about 63% of ARM’s group headline earnings of R3.2bn.
The decline in contribution was mainly from a stronger rand, the closure of Beeshoek, and weaker manganese ore and alloy prices.
Assmang reported manganese ore production of 3.94 million tons in the 12 months ended June, a 5% increase, while iron ore output was 9% lower at 13.25 million tons.
ARM said legal advice it had received indicated that Assore’s claims and allegations had no substantive merit. It planned to defend the case and bring its own proceedings against Assore over its management rights and access to information.