South Africa's wealthy Sacco family accuses billionaire Patrice Motsepe's ARM of power grab

Assore Ltd., the mining house controlled by South Africa's Sacco family, has accused billionaire Patrice Motsepe's African Rainbow Minerals Ltd. of seizing control of Assmang, the iron ore and manganese producer the two companies have owned equally for about two decades.

ARM has "appropriated to itself decision-making powers it does not possess," shutting out Assore and Assmang's own decision-making bodies, Assore said in a statement issued by its chairman, Charles Walters, Miningmx reported on Wednesday. Assore said it was surprised by the change after "many years of equilibrium" between the partners.

Walters did not say which decisions ARM had taken over. He described the dispute as the result of different readings of the rights and obligations set out in Assmang's shareholders' agreement.

Assore has gone to court seeking orders that would restore the balance of power laid down in that agreement and deal with certain decisions it says ARM imposed on Assmang in breach of the agreed governance arrangements. The company said it would prefer an amicable settlement and that talks with ARM are continuing alongside the litigation.

ARM, which disclosed the lawsuit to the Johannesburg Stock Exchange on Tuesday, rejected the claims. "Based on legal advice received, ARM believes Assore's claims and allegations have no substantive merit," the company said. It said it would defend the case and bring its own proceedings against Assore to confirm its right to manage Assmang and appoint its senior executives, and to obtain information it says Assmang needs to meet its legal and regulatory obligations.

A family business since 1935

Assmang sits at the center of a mining fortune the Sacco family has built over three generations. Guido Sacco founded the company in 1935 with Anglovaal, the former South African mining house. His son, Desmond Sacco, ran Assore for decades and chaired Assmang for many years. Desmond's son, Patrick Sacco, is Assmang's chairman today.

The family controls Assore through Oresteel Investments, a holding company it owns with Japan's Sumitomo Corp. Assore was listed in Johannesburg from 1950 until the family took it private in 2020, and it does not publish its accounts. Besides its half of Assmang, it runs smaller mines in the Northern Cape, Limpopo and North West provinces.

Assmang and ARM have been partners since the 2000s, when Motsepe's company bought into the business. Under their arrangement, ARM manages Assmang's operations. Those include the Khumani and Beeshoek iron ore mines in the Northern Cape, which export through Saldanha Bay, the Nchwaning and Gloria manganese mines in the Kalahari and the Cato Ridge ferromanganese smelter in KwaZulu-Natal. Assmang employs more than 10,000 people.

What is at stake

The venture is a large source of income for both families. Assmang contributed just over 2 billion rand ($120 million) to ARM's headline earnings in the year to June, about 63% of the group's total of 3.2 billion rand, although that was 42% less than a year earlier because of a stronger rand, the closure of Beeshoek and weaker manganese prices. Manganese ore output rose 5% to 3.94 million tons, while iron ore output fell 9% to 13.25 million tons.

ARM's share of Assmang's cash stood at 3.9 billion rand ($234 million) at the end of June. The two partners are still negotiating the size and timing of Assmang's final dividend for the year, and ARM has said the lawsuit does not concern the dividend.

Motsepe, 64, founded ARM in the late 1990s and built it into one of South Africa's biggest diversified miners. Forbes valued his fortune at $3.5 billion in July. He also faces pressure as president of the Confederation of African Football, and on Wednesday ARM said a Tanzanian court had struck out a separate $195 million claim brought against him and his companies by U.S.-based Pula Group.