Mining industry concerns over Donhad acquisition

The Australian Competition and Consumer Commission has highlighted mining industry concerns regarding grinding media company Moly-Cop’s proposed acquisition of competitor Donhad in its statement of issues.

The two companies are the only domestic manufacturers of forged steel grinding media in Australia, which is primarily used by the mining industry to crush ore to a fine powder.

In the statement ACCC chairman Rod Sims said the industry had concerns regarding diluted competition.

“Many users of grinding metal are concerned,” he said.

“Their concerns are centred around the loss of strong competition said to exist between Moly-Cop and Donhad.

“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,”

Mr Sims said the competition watchdog was investigating the ability of customers to switch to using imports if prices rose.

Market feedback on the competitiveness of imports has been mixed, but we do understand significant volumes of grinding media are already being imported,” he 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.”

Moly-Cop has one Australian manufacturing facility in Newcastle while Donhad has three across the country in Newcastle, Townsville and Perth.

Moly-Cop is the world’s largest manufacturer of grinding media and was formerly part of Arrium Limited’s global mining consumables business.

The company was sold to New York based private equity firm American Industrial Partners earlier this year.

Donhad is fully owned by publicly listed US company Valmont Industries.