Regulator Blocks Sasol’s Sodium Cyanide Sale to Draslovka

03.12.2021 - South Africa’s Competition Commission has blocked Sasol’s proposed sale of its sodium cyanide business to Czech-based firm Draslovka on pricing concerns. Sasol said the decision to block the deal was unexpected, particularly given that the Commission had fully evaluated the pricing issue earlier in the review process.

Sodium cyanide is commonly used in the extraction of precious metals and South Africa’s gold mining sector depends on Sasol to supply the liquid chemical.

The Commission said several purchasers of Sasol’s sodium cyanide raised concerns that Draslovka might charge import-parity prices for locally produced volumes if the transaction was approved. Import-parity pricing would mean that material produced in South Africa would be priced as though it was imported from another country and include the associated importation costs. Gold mining customers said this would have a significant negative impact on their long-term profitability and sustainability.

Despite trying to resolve the concerns, the Commission said the parties were unable to agree, leading to it ruling against the deal. Sasol is now considering its options, adding that it and Draslovka remain convinced that the transaction is in the interest of both the cyanide business and South African customers, especially given that the Czech firm had plans to expand the business’s operations and enhance its competitiveness.

Separately, Draslovka closed on Dec. 1 its $521-million purchase of Chemours’ mining solutions business, making it the world’s largest producer of solid sodium cyanide. The company said it plans to use the expanded global platform to support further strategic mergers and acquisitions, including its own organic growth.

Author: Elaine Burridge, Freelance Journalist