UAE-based IT company Dudu Communications has acquired a 50%stake in FerroChrome Furnaces (FCF), a major producer of low and medium carbon ferrochrome based in South Africa.
While Dudu is most commonly associated with a multi-lingual social media platform, its Russian owner, Alibek Issaev, is seeking to expand and diversify its business interests.
“We aim to corner the low and medium carbon ferrochrome supply markets during the next two to three years, and if that means a price war to achieve market share, we are ready to do battle and we have the resources to do so,” stated Issaev after signing the deal with Abbas Moti, executive chairman of FCF.
The Moti family is also has involvement in Kilken and Global Tailings Solutions, a platinum plant at Amandelbult mine owned by Rustenburg Platinum, a subsidiary of Anglo American.
“The deal will bring substantial cash injection into the South African economy and almost double production at the FCF plant [to 420,000 tonnes per annum] over the next two years,” said Sir Sam Jonah, non-executive chairman of FCF.
In an independent two-year due diligence study, Venmyn Deloitte valued FCF’s business at $1.7bn. However, it has also been suggested that this is a conservative valuation based on models of industry and country risk that should lower by the completion date of the project.
FCF spokesperson Ashruf Kaka added that access to UAE business interests would fast-track the firm’s aggressive expansion ideals, and that the firm has already formalised exclusive supply chain agreements with a Dubai agency for the global distribution of its ferrochrome.
He added: “An international partner such as Issaev places FCF at the forefront of the competition with two other overseas competitors, and will make us the biggest exporter of low and medium carbon ferrochrome within the next three to four years.”
Moti commented that the establishment of the production facility has created significant local opportunities and that its expansion will provide a further 3,000 direct and indirect jobs.
“This is in line with the government’s macro-economic plans for job creation and community development, and will further benefit our balance of payments,” he said. “South Africa has traditionally exported raw materials, and then re-importing refined materials at high cost.”