Fleetwood Grobler's Sasol faces hurdle in $77 million deal

South African energy and chemicals conglomerate Sasol, led by CEO Fleetwood Grobler, faces a major setback in its efforts to divest its profitable sodium cyanide business to Czech Republic-based Draslovka Holdings in a deal valued at R1.46 billion ($77 million).

The Competition Tribunal has issued an order prohibiting the proposed intermediate merger between Sasol and Draslovka Holdings, citing concerns about pricing effects that could adversely affect South African gold mining firms.

Sodium cyanide, a vital chemical compound used in extracting precious metals such as gold and silver, is pivotal in South Africa’s gold mining industry. Sasol currently maintains a monopoly in the production of liquid cyanide within the nation, making it a critical supplier to gold mining operations.

The Competition Commission (CompCom), an independent regulatory authority, had previously voiced apprehensions about this transaction. In 2021, CompCom warned that the merger could lead to significant pricing impacts, potentially placing South African gold mining companies at a disadvantage.

In a statement, the Competition Tribunal noted, “Sasol has a monopoly position in the production of liquid cyanide in South Africa, and the gold mining sector is dependent on Sasol for the supply of liquid cyanide. Regarding the proposed transaction, Sasol would have supplied certain key inputs required in the production of sodium cyanide to Draslovka.”

Sasol, headquartered in the affluent Gauteng Province of Sandton, is a leading integrated energy and chemicals group, known for its production of liquid fuels, chemicals, and electricity, and its role as a technology developer in synthetic fuels.

Under the leadership of Fleetwood Grobler, the South African conglomerate operates across 33 countries and employs a global workforce of 30,100. In recent times, Grobler, a minority shareholder in Sasol, has been leading Sasol’s transition toward cleaner and renewable energy strategies.

Sasol had initially announced its intention to sell its profitable sodium cyanide business to Draslovka in July 2021, with the deal valued at R1.46 billion ($77 million).

In response to CompCom’s rejection later that year, Sasol argued that the sale was in the best interest of its local cyanide business, employment opportunities, and customers, adding that Draslovka’s involvement would improve the business and foster competition within the sector.