The clash between the manganese mining entities managed by Patrice Motsepe and Desmond Sacco is hotting up.
This tension has bubbled over at Assmang, the joint venture between Motsepe’s African Rainbow Minerals (ARM) and Sacco’s Assore, which has been struggling amid a drop in manganese prices and rising costs. Last year, for instance, ARM’s half share of Assmang’s headline earnings fell 42% to R2bn.
This has manifested in lower dividends for both parties. For its last financial year, ARM received only R3.4bn in dividends from Assmang, down from R4.5bn the previous year and R5bn the year before that. The dividend for the year to June has yet to be agreed.
But a combination of a struggling manganese business and evident distrust between the entities controlled by two of South Africa’s wealthiest people has soured what was once a much-lauded partnership.
On October 13, ARM revealed that it had received a high court summons from Assore, accusing it of seizing control of the joint venture.
The details are complicated, but it largely boils down to a difference of opinion over whether ARM actually manages Assmang or whether it just provides operational services as an independent contractor.
In its legal papers, Assore accused ARM of firing senior Assmang staff and hiring others without consultation. It now wants a declaratory order from the court prohibiting ARM from making “unilateral decisions”. ARM rejects this, saying it hasn’t broken the shareholder agreement.
The standoff gets murkier because there is a tax issue too. Assore says ARM is refusing to file Assmang’s last tax return, accusing Kajal Bissessor, Assmang’s finance manager (who came from ARM), of going to extraordinary lengths to demand new information before submitting the return.
Assore reckons it has supplied all the required information, which has even been audited. In its high court filing, Assore wants Bissessor declared a delinquent director — a major blot on her record, should it happen.
All told, it’s a messy situation, and ARM has filed objections to the Assore summons. This sets the stage for a bad-tempered showdown, with ARM making bruising counterclaims of its own, including demanding “redress” for the harm caused to Assmang by “material breaches” of the shareholder agreement.
Marriage made in heaven
To understand how it got to this, it’s worth reviewing the history.
Assmang, controlled 50-50 by ARM and Assore, has a board and an executive committee on which each company has “equal representation”. None of the chairs of any of these committees has a casting vote; if no solution can be reached, the status quo prevails. This means consensus is written into the structure, says Assore CEO Charles Walters, since no party can force its will on the other.
The way it works is that ARM earns a fee for running the mines and providing financial and administrative services, while Assore earns a commission as the marketing agent for Assmang’s iron and manganese ore through its 100% subsidiary Ore & Metal.
And for 20 years, it worked swimmingly, ever since Motsepe first strung together the deals that led it here, starting with the 2003 transaction to sell ARMgold to Harmony Gold in exchange for shares in Assmang.
This is how Assmang, a company jointly founded in 1935 by Anglovaal and the Sacco family, led by patriarch Des Sacco, became part of Motsepe’s ARM. In 2005, Assore bought out its minority shareholders while ARM reduced its stake to 50%, so both parties owned equal amounts.
It all seemed neat enough: the proceeds from Assmang would be distributed through the negotiated dividend, while the costs were divvied up too.
In the early days, Assore was publicly listed, as was ARM. But this changed in 2020 when Assore argued that its low liquidity — the free float was 17% — and its undervaluation justified going private after 70 years on the JSE.
The buyout seems to have changed the dynamic between ARM and Assore, which then became answerable only to the Sacco family and Sumitomo, the Japanese corporation that owns an effective 47.5% of it. By contrast, ARM is still a listed entity that has to juggle public disclosure requirements and the expectations of shareholders.
It is this stress, an insider says, that contributed to the clash in how Assmang’s partners deal with dividends. “ARM has always sought — or been desirous of — taking as much cash out of the business as possible, while Assore is more conservative,” the source says.
This may not be an insignificant point. In recent years, Assmang has been paying out higher dividends than its profits might warrant. For 2025 and 2026, ARM got R4.5bn and R3.4bn in dividends, while Assmang’s headline earnings were R3.5bn and R2bn.
With profits falling, that discussion becomes even more difficult.
ARM, of course, might be looking jealously at its peers, such as Glencore, which has been able to offset rising mining costs with greater marketing income. Glencore’s advantage has always been its marketing department, which thrives off price and cost volatility. ARM doesn’t have a marketing function.
ARM’s baggage
This is at the heart of ARM’s counterclaim against Assore, which, though details have yet to be revealed, is understood to relate largely to a commercial charge against Ore & Metal, which receives commission from Assmang.
In a nutshell, there seem to be two possible objections ARM is making. One is that Assore’s Ore & Metal may be flirting with transfer pricing — the practice of “selling” metals to a subsidiary in a low or lower tax jurisdiction to book a gain. The other is that Ore & Metal is underperforming on its marketing responsibilities.
Asked about the first scenario, Walters says transfer pricing is “not relevant” in any way. “Ore & Metal, the agent that receives the commission from Assmang, is a local company. There is no transfer pricing between Assmang and Ore & Metal.”
Walters is clear that the Ore & Metal marketing business is conducted “well within the norms” of competitive markets.
“There are comparables with Kumba’s realised iron ore prices; there are comparables with South32’s realised manganese ore prices. However, our grades are different, our markets are different. The customer dynamics are different. The competitors in each market are different,” he says.
Still, Assore is hoping that, despite the apparent standoff, the Assmang joint venture can be returned to its former equilibrium.
As it is, Motsepe’s company is already under pressure from other quarters. Over the past three years, ARM’s shares have fallen about 6%, while Glencore has risen 12%, South32 has gained 26% and Anglo American has risen 72%. Adding ARM’s dividends gives it a positive total shareholder return of 20%, but it still lags peers.
Attempts by ARM to improve its portfolio haven’t gained traction either. It sold its share of Zambian copper mine Lubambe for $49m after investing $400m, and last year suffered a large write-down on its purchase of Bokoni Platinum Mines, a high-grade but tricky platinum asset.
In Tanzania, ARM clashed with its former partner, the California-based Pula Group, when it opted out of a joint venture and invested in a neighbouring graphite mine, Evolution Energy Minerals, instead. Pula filed a $195m claim against ARM, which it defeated in court.
Still, ARM has kept its head above water thanks to its precious metals portfolio, including its 12% stake in Harmony Gold, even if its bulk metals business is suffering. Even coal did badly last year.
Then finally, there is confusion over what role Motsepe will play at ARM, given that he recently became a nonexecutive director amid speculation that he might make a play to become the next leader of the ANC.
Motsepe sometimes cuts a frenetic, distracted figure, but he also remains a widely respected businessman.
As for the standoff with Sacco, both sides say they want peace.
ARM says it “remains committed to working collaboratively with Assore” in good faith while “respecting the judicial process and allowing the matter before the courts to be determined in accordance with the law”.
Assore says the same. But the truth is, if the conflict is to be resolved in court, it will not be speedy — and will only raise further questions about a once beautiful relationship.
