Manngwe Mining Alleges ArcelorMittal Abused Monopsony Power Over Assen Mine

Manngwe Mining describes ArcelorMittal’s actions as an abuse of “monopsony” power — the dominant buyer is attempting to force ownership of the operation away from its shareholders and the community.

Iron ore fist

According to the junior mining company, AMSA was, in effect, the sole buyer of the iron ore produced at Manngwe’s Assen Iron Ore Mine.

Manngwe says AMSA used that monopsony position to withhold and ration purchase orders, making resumption conditional on Manngwe surrendering equity in the business. It claims that this pressure ultimately forced the Assen to stop operations.

The company has confirmed that the dispute is ongoing, with legal processes underway and further filings expected before the Competition Tribunal.

AMSA's relationship with Manngwe Mining reportedly “became increasingly difficult over time due to a range of commercial and operational challenges.”

These include “inconsistent supply performance, quality concerns, pricing issues, governance instability and uncertainty regarding long-term supply sustainability,” according to Business Report.

The steel producer told the financial newspaper that despite these problems, the group had been in talks with Manngwe for a long time.

AMSA was trying to find a commercially viable way forward and to help resolve these issues “rather than taking steps (as it would have been entitled to do) that would have had an adverse effect on Manngwe Mining.”

Held back

Manngwe Mining claims AMSA’s conduct has undermined more than a decade of investment, development and community-centred growth.

“AMSA was, in effect, our only buyer — and it was that monopsony position that made this possible.

“To make the resumption of orders conditional on our parting with equity placed unsustainable pressure on the business,” said Manngwe Mining CEO Mutheiwana Rambuwani in a statement.

Manngwe Mining maintains that the conduct it has experienced constitutes an abuse of a dominant position under the Competition Act 89 of 1998.

“We believe that conduct is unfair and not in line with the spirit of the Competition Act and the protections it affords suppliers — and it is the reason we have approached the Tribunal,” added Rambuwani.

The company added that this is not only commercially unreasonable but also damaging to its workforce and the wider community that relies on the mine’s continued operation.

“The uncertainty created by this dispute has placed real strain on the many stakeholders who rely on this operation — our workforce, our suppliers and our community.

“They deserve clarity and fairness, and it is they who carry the cost of a situation they did nothing to create,” said Rambuwani.

Hope for resolution

ArcelorMittal stated that to help Manngwe Mining improve performance despite recurring operational and performance-related issues, it had provided financial support (a loan on favourable payment terms), expedited payment arrangements, technical assistance, and “ongoing indulgences”.

AMSA says these arrangements also included engagements on long-term supply security and addressing financial exposure.

“Alternatives were explored to find a solution for the outstanding loan owed by Manngwe Mining and to support the company with agreed volumes, and it was agreed that certain options be granted to AMSA in the supply agreement, based on the conclusion of option agreements with the shareholders of Manngwe Mining,” it said.

“The suggestion AMSA sought to... destroy Manngwe Mining is therefore entirely inconsistent with the factual history of the relationship.”

Despite the dispute, Manngwe says it is committed to constructive engagement and to finding a resolution that protects the business’s integrity.

“We have always valued our commercial relationship with AMSA, and we invested heavily to meet their specifications and security-of-supply requirements over many years.

“We continue to believe a negotiated resolution is achievable — one that keeps Manngwe Mining’s Assen Iron Ore Mine in the hands of its current shareholders while we continue to supply AMSA on fair commercial terms, as we always have,” remarked Rambuwani.