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Competition Commission grants conditional approval for Sinopec’s $900m Chevron SA buy

MINING WEEKLY / 11 JANUARY 2018 - 15.00 / HENRY LAZENBY

VANCOUVER (miningweekly.com) – South Africa’s antitrust watchdog has given conditional approval to China Petroleum & Chemical Corporation’s (Sinopec’s) proposed $900-million acquisition of a controlling stake in Chevron South Africa (CSA), the company said on Thursday.

In considering the transaction, the Competition Commission noted that it is unlikely to substantially prevent or lessen competition in any of the identified markets.

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Sinopec expects the Competition Tribunal to set down a date for a hearing to consider the Transaction shortly.

Sincopec is vying against international commodities giant Glencore International, who has in October entered into an agreement with Off The Shelf Investments Fifty Six to acquire a 75% interest in Chevron South Africa, as well as a 100% interest in Chevron Botswana, for $973-million.

The transaction, if implemented, will be the single largest acquisition by a Chinese company of a controlling interest in a major South African company. However, minority shareholders of CSA have indicated that they intend to exercise their right of first refusal, and Sinopec will not interfere with that process.

Sinopec reiterated its view that South Africa is a critically important investment destination, noting that it’s undertakings are designed to ensure that the transaction will generate significant public interest benefit for the country.

“Sinopec believes that South Africa’s established market, infrastructure facilities, legal environment, human resources as well as its strategic role on the continent will provide a strong platform for the implementation of Sinopec’s globalisation strategy. Sinopec will utilise these favourable factors together with its competitive advantage in the energy industry, to achieve an optimal balance of economic growth and sustainable development for Sinopec and South Africa,” spokesperson Lu Dapeng said in a statement.

The company has undertaken to preserve current levels of employment; bolster the Cape Town-based refinery capital investment plan beyond currently budgeted improvement plans; further develop CSA’s wholesale and retail chains by introducing small businesses and black-owned businesses as fuel retailers; increase CSA’s current Broad-Based Black Economic Empowerment (BBBEE) shareholding level; lift liquefied petroleum gas supplies to black-owned businesses; maintain or increase CSA’s local procurement levels; establish a development fund targeted at small and black-owned businesses to increase the level of local procurement; and promote exports to China.

To this end, Sinopec has recently established a regional head office in South Africa to coordinate and oversee its midstream and downstream operations in Africa.

Should the transaction be successful, the proponent of the deal, Sinopec’s subsidiary SOIHL Hong Kong Holding, will gain control of CSA’s Cape Town refinery, which has a nameplate capacity of 100 000 bbl/d, a network of about 850 service stations, a lubricants blending plant in Durban, storage tanks and oil depot distribution facilities. CSA currently employs about 1 200 direct employees and indirectly supports about 56 000 jobs.

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LINK : http://www.miningweekly.com/article/competition-commission-grants-conditional-approval-for-sinopecs-900m-chevron-sa-buy-2018-01-11/rep_id:3650

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