JCI, despite already having had its merger aspirations rebuffed, is still pushing ahead with plans to buy a 27 per cent stake in Lonrho from Anglo American, the South African mining giant.
Lonrho, valued at almost pounds 1bn on the stock market, is believed to be in talks with Anglo Vaal, another African miner. But JCI is intent on using its shareholding to block that and any other future mergers. It also wants at least one seat on Lonhro's board.
Mzi Khumalo, JCI's chairman, is determined to broker a merger and is unwilling to sell the stake in Lonrho at any price.
"The stake in Lonrho gives us a seat at the negotiating table. It makes sure that whatever they want to do they will have to come to us first," Mr Khumalo said yesterday.
JCI is understood to want to push Lonrho to speed up its plans to demerge its African trading businesses and sell its Princess luxury hotel chain. When these businesses are gone, and Lonrho is left as a pure mining group, then JCI believes it can convince Lonrho's shareholders that there would be a clear rationale for a merger.
JCI wants to marry the two groups' coal mining operations to create one of the largest coal businesses in the world. It is also keen to get hold of Lonhro's platinum assets, which would create a diversified mining group, more insulated from the damaging effects of the plunging gold price. The combined group would be listed in London as well as South Africa and so would have greater access to new capital.
The European Commission is investigating JCI's acquisition of Lonrho's shares from Anglo. It is concerned that Anglo still pulls the strings at JCI, having sold the group to Mr Khumalo just last year. Some analysts believe Anglo is desperate to get hold of Lonhro's platinum interests by the back door. But Anglo is understood to be willing to sell its 13 per cent shareholding in JCI and end its involvement with the group, to push the share sale through.
JCI has also scotched rumours that it plans to sell Lonrho's near 34 per cent stake in Ashanti Goldfields, the Ghanaian goldfield regarded as one of Lonrho's hidden jewels, to Anglo. It is determined to keep the stake in Ashanti in the event of a merger.
Another potential stumbling block is mining rival Gencor's pre-emptive rights over Lonhro's platinum interests, which could be invoked should a merger take place.
But the European Commission is unlikely to allow Gencor to buy Lonrho's stake over fears it would have a virtual monopoly of the world's platinum market. And industry sources suggest Gencor has privately given up any hope of owning Lonrho's platinum stake and will not exercise its pre-emption rights.
Mr Khumalo met Lonrho's management team on Thursday to discuss his proposals. But Lonrho refused to comment yesterday on whether is would reconsider a merger. "You have got to remember that JCI does not actually own anything yet and the European Commission is still looking into the acquisition of its stake from Anglo," a Lonrho spokesman said yesterday.
Mr Khumalo is one of South Africa's fast-rising black business businessmen. A friend of Nelson Mandela, he spent 12 years as a political prisoner on South Africa's Robben Island. On his release he quickly rose to prominence in the black business world, spearheading last November's pounds 380m acquisition of a 34.9 per cent stake in JCI from Anglo American.Reuse content