CUMI to Acquire Majority Holding in Foskor Zirconia

3 July 2008

Carborundum Universal Ltd (CUMI), a Murugappa Group company, has entered into an agreement with Foskor (Pty) Ltd of South Africa to acquire a 51% equity stake in Foskor Zirconia (Pt) Ltd, Phalaborwa, South Africa (FZL), for an undisclosed sum.

While CUMI, through its investment subsidiary, will hold a 51% stake in FZL, the balance will be held by Foskor (Pty) Ltd and two other South Africa based concerns, it is reported.

The agreement, however, is subject to regulatory approvals in South Africa.

With a 4,200 tonnes per annum installed capacity for zirconia, FZL is the third largest producer of zirconia in the world. Fumed silica is also produced as a by-product of the furnace operation.

FZL, according to Dhanvanth Kumar, Company Secretary of CUMI, was created by spinning off the zirconia facility of $425-million turnover Foskor (Pty) Ltd into an independent entity. Foskor is a big producer of phosphate and phosphoric acid in South Africa. Mr Kumar said zirconia was an important input for the abrasives industry. With the acquisition of a majority stake in FZL, the Murugappa Group company would have a complete range of products under its belt, he added. “This investment will be a good platform for CUMI to address the growing minerals business,” he added. The sales of FZL in 2007-2008 were $16 million.

Foskor was seeking a strategic partner to take FZL to its next phase of expansion and growth. CUMI, amongst the two companies globally with interests in abrasives, ceramics, refractories and minerals, was a logical choice, he pointed out.

CUMI is a fully vertically integrated company with operations in Australia, Canada, China, Russia, Middle East, the USA and in India. CUMI brings to FZL its mineral processing knowledge, its brands, market access, application engineering expertise and global management practices. This will help FZL to grow its range of products and business.