EC no to Anglo control of Lonrho

South African platinum 'carve-up' forestalled by Task Force

The European Commission is to block South African mining giant Anglo-American from maintaining effective control over Lonrho at the end of its current competition review.

The move will mark the second time the Commission's powerful Merger Task Force has stopped South African groups carving up the world market in platinum.

The review, started last December, officially has until May 5 to run. Sources close to the inquiry, however, say that competition commissioner Karel Van Miert has now stated privately that he will not allow Anglo to vote its 26 per cent stake in Lonrho at the end of the investigation.

"Van Miert has reaffirmed in the last week that he has absolutely no intention of letting this one go through," one source said this weekend. Anglo raised the Commission's hackles last November by increasing its stake through the purchase of former chief executive Dieter Bock's 18.3 per cent holding.

Only last April, the European authorities vetoed a pounds 400m merger of Lonrho's platinum mines with Anglo rival Gencor. The deal would have given the combined firm 38 per cent of the world market in the precious metal, equal to that already held by Anglo's Rustenburg.

Platinum is a vital catalyst for the motor industry, and the Commission is concerned Anglo's Lonrho stake might lead to reduced competition.

A permanent voting block would leave Anglo in a quandary over what to do with its pounds 400m investment. Commission sources indicate that reducing the holding, say to below 15 per cent, would not necessarily satisfy Mr Van Miert.

The uncertainty is holding up Lonrho's plans to demerge its mining and African agricultural interests under new chief executive Nick Morrell.

The expected pounds 300m sale of the group's Princess hotels chain in the US to Saudi billionaire Prince al-Waleed bin Talal has also stalled, though Lonrho sources now hope for an agreement by the group's annual meeting in March.

This weekend, the Commission would not comment officially over the progress of the review.

"We are still seeking to gather all the information we can," a spokesman said. "Anglo will be the first to know what our question marks are and what remedies they have."

Lonrho, however, expects a veto to be followed by talks with Gencor and Anglo to resolve the stalemate.

It currently owns 73 per cent of its platinum operation, with Gencor holding the rest and a pre-emptive right over Lonrho's stake. That option, however, is in effect rendered worthless by the Commission's stance.

Lonrho's preferred course would be to take full control, though sources think that unlikely.

At the very least, it is seeking to renegotiate the agreement with Gencor, struck by founder Tiny Rowland, so as to be able to take out dividends to ease its debt burden.