The Australian Competition and Consumer Commission will not oppose the proposed acquisition of certain assets of Westlime by Cockburn Cement, ACCC Chairman, Professor Allan Fels, said today.
On 4 July 2001 Iluka Resources, the parent company of Westlime, announced its intention to close the quicklime plant operated by Westlime at Dongara in Western Australia. Iluka noted that the operations of Westlime had been constrained by technical difficulties and declining regional markets since production began in 1997. Iluka also announced that it had entered into supply agreements with Cockburn to ensure it has an available source of lime for its own requirements and that of its customers.
Cockburn approached the ACCC shortly after this announcement was made, seeking informal clearance to acquire certain assets of the Westlime facility at Dongara.
The area of competitive overlap between Cockburn and Westlime is in the manufacture of quicklime. Quicklime is a strong alkaline that is used extensively in the alumina, gold, mineral sands, base metals, building, water treatment and steel industries.
The ACCC conducted market inquiries with submissions being sought from competitors, customers, industry associations and State Government departments.
The financial failure of Westlime and the lack of the alternative buyers of the Westlime assets led the ACCC to consider the likely effect of the acquisition on competition compared to the effect of Westlime’s assets exiting the market.
Market inquiries and audit committee reports prepared in respect of the Iluka group confirmed that ongoing problems with the lime plant at Dongara and continued losses sustained as a result have prevented Westlime from remaining viable.
The ACCC also noted that Cockburn was the only entity to make a formal offer for the Westlime assets and market inquiries provided support for the view that there are no other players likely to enter the Western Australian lime industry in the near future. This is due to excess capacity in the industry, a downturn in lime demand (particularly from the gold industry) and the existence of long-term contracts in the market.
In the circumstances ACCC concluded that the proposed acquisition is unlikely to result in a substantial lessening of competition.