Lindsay Robertson, executive board member, Sallies
Send this article to a friend
Print this page

> JSE:SALLIES LIMITED:
28c 0%
If you want to share this article, simply sign into one of these sites and select your network. It’s that easy Click here to find out more about how to use this button

How Robertson saved Sallies
David McKay
Posted: Fri, 22 Jul 2005

[miningmx.com] -- HE WON’T admit as much, but Sallies CEO Lindsay Robertson played a game of risky brinkmanship with United States fluorspar importer Honeywell in order to save the South African company.

Sallies produces fluorspar from a mine near Zeerust – Oom Schalk Lourens country. The fluorspar is used to produce gas for air-conditioning units and new-age, ecologically friendly CFCs.

Says Robertson: “Sallies’ export contract with Honeywell was killing the company, so it didn’t matter if we exported to it or not.” That was after a decision in March to halt further fluorspar exports to Honeywell, originally signed in 2001. In terms of that deal – which Robertson terms disastrous – Sallies was selling fluorspar at no more than US$116/t when, in fact, a decline in Chinese exports propelled spot prices to $170/t.

Robertson says: “Sallies had no right to renegotiate the contract. But I went to Honeywell several times to explain the situation. They weren’t listening. They didn’t understand what the contract was doing to Sallies.”

Robertson, who as a director of turnaround team FRM had been appointed to save the company, dealt his last cards by refusing to export more fluorspar. The outcome is that Honeywell will pay Sallies its cost price for fluorspar plus US$1/t. The difference between the price received and the original contract has been protected in an interest-free loan agreement repayable in 2007. Thereafter, the loan carries interest. However, Robertson says that the health of the fluorspar market is such that Sallies will have enough cash flow to settle the loan.

In 2002, China exported about 2m t/year of fluorspar, an amount that’s expected to be reduced to about 400 000 t this year, owing to heavy internal demand. China may become a net importer by 2010, Robertson says.

Though FRM’s contract expires next year, Robertson says that there are no plans to leave the company yet. “We’re in for the long haul.” In fact, long-term plans are in place to provide a more thoroughgoing exit strategy for FRM, which could include corporate activity with another fluorspar player.