“Strategically logic”. The words chosen by manager Rainier van Roessel to describe Lanxess’ new divestiture. The German giant, active in the chemicals’ segment, announced it sold 74% of ownership of its South African chromium mine to Clover Alloys Proprietary Limited, a local supplier of chromium-based minerals. In other words, Lanxess is continuing on its announced strategy and is selling off the entirety of its chromium business. The path was first undertaken in August, when the group sold its “chrome chemicals” division to China-based Brother Enterprises.
Slow marketplace
Last May, when the company published its first quarter data for 2019, the Germans had highlighted the positive performance of the tanning sector: +3.3%. But the Leather Business Unit was affected by the “weak demand” of chromium-based products. Three months later the group announced the sale of its Newcastle site (in South Africa) to Brother Enterprises. In the mentioned plant, Lanxess used to produce di-chromate sodium and employe 220 people. While chrome-based salts will continue to be produced in the Merebank site (at least until 2024”, write the Germans), in order to satisfy the demand from the tanning industry, but operations will be conducted on behalf of Brother Enterprises.
The deal
The agreement between Lanxess and Clover Alloys was underwritten on November 15th, but the deal will be closed once the proper authorities will give the “go-ahead”. Thus, it will probably be closed by end of next year. 26% of ownership will stay with DIRLEM, current minority shareholder that represent the employees and other private investors. “We have been focusing our portfolio on different chemicals. We are systematically pursuing this objective – explains Mr. van Roessel, a member of Lanxess’ Board of Directors – Following the sale of our chromium-based operations, it was strategically logical to sell our stake in the mine, as it represents the key source for this type of activities”. The mine employs about 500 people and circa 1,000 contractors. The value of the deal hasn’t been disclosed.
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