Botash bullish after merger approval

PATRICIA MAGANU
Staff Writer | Friday March 12, 2010 00:00

'We, as staff of Botswana Ash, look forward to an exciting future with the Government of Botswana as our existing shareholders and Chlor Alkali Holdings as (our) new partner,' says the company's Managing Director Derek Cochrane.

In an interview with Business Week, Cochrane said CAH was identified as the preferred bidder. 'With the existing private shareholders of Botswana Ash expressing their desire to sell their shareholding, Chlor Alkali Holdings was identified as the preferred bidder,' he said.

CAH were chosen largely due to its view of the future of Botash as well as synergies between the companies'products, he added. CAH currently supplies chemical grade salt through its subsidiary, Walvis Bay Salt Holdings. Botash, which produces chemical grade salt as a by-product of ash, is an alternative supplier of chemical grade salt in southern Africa.

However, the tribunal decided that by implementing certain conditions, it could remedy the competition concerns that arose from the merger and ultimately changed its mind. Subject to the merger, Botash would supply any inland South Africa-based purchaser of unbagged and railed chemical grade salt for use in South Africa.

Before the merger, Sasol was the only inland customer getting its chemical salt requirements from Botash. But Sasol had now concluded a long-term supply agreement with the merging parties. The effects of that agreement on competition need to be considered, said the tribunal.

CAH, which is controlled by Investec, plans to acquire a 50 percent shareholding in Botash from Anglo American, De Beers Botswana, AECI, FirstRand Bank, Nedbank and Standard Bank.At the conclusion of the transaction, Botash would be jointly owned by the Government of Botswana and CAH.

'They have proposed a 'business as usual' approach where we at Botash continue to do what we do and get better at it,' said Cochrane. As with the present shareholders, they would prefer that the day-to-day operation and management of the company remain in the hands of those on site through the Managing Director via the Botash Board.'

Cochrane further said the recent global issues did affect the sales of Botash during 2009 but they managed to control the effects.

'Fortunately, through mainly strategies employed by the company, no staff had to be retrenched during the year, no production decreases or stoppages were necessary and the year-end financial figures were actually positive to the budget,' he said.

Botash even managed to pay a bonus as well as increases during the year. 'The markets for soda ash and salt are increasing year-on-year and CAH have expressed a desire for Botash to grow to meet this marketing opportunity,' Cochrane added.