The Competition Commission is investigating allegations of racial discrimination and exclusionary conduct by Arcelor Mittal South Africa (Amsa) against a former supplier, with the steel major prepared to act against the company should tensions escalate further.A formal complaint by Manngwe Mining, owner of a R606m North West iron ore mine set up to supply Amsa with iron ore, lays out allegations of a calculated and racially motivated sleight of hand which it says violates competition laws.In a written response to Business Day, Amsa rejected the allegations and cited Manngwe’s inconsistent supply performance as the reason the two parties’ relationship ended in acrimony.“The relationship between Amsa and Manngwe regrettably became increasingly difficult over time due to a range of commercial and operational challenges, including Manngwe’s inconsistent supply performance, quality concerns, pricing issues, governance instability and uncertainty regarding long-term supply sustainability,” the group told Business Day.In 2016, Amsa provided Manngwe with R40m in prefunding to help it establish its North West iron ore mine in exchange for a 26-month iron ore supply contract on mutually negotiated, market-linked prices.On top of financial support, Amsa also provided favourable payment terms and “significant commercial and operational support in an effort to assist the development and sustainability of its operations”, it said.This included accelerated payment arrangements, technical engagement and other “ongoing indulgences to enable Manngwe to achieve better performance despite repeated operational and performance-related concerns”.Since then, the mine has grown to be valued at R606m, according to Manngwe, generating a hefty R1.7bn in cumulative revenue and employing 260 people from rural communities.But the relationship between Amsa and the supplier has gradually deteriorated. Manngwe has accused Amsa of forcing it into unfavourable and even predatory contracts, including paying half the price it offered to competitor Afrimat (which happens to be largely white-owned) on racial grounds.‘Anticompetitive agreement’ claimAt the heart of Manngwe’s argument is a contract signed by the two companies in 2024 which requires Manngwe to offer Amsa any and all of its iron ore supply before any other buyer. This, said Manngwe, characterises an “anticompetitive agreement”.More seriously, Manngwe alleges that Amsa went so far as to force its director to sign the agreement by threatening to immediately halt all iron ore purchases and close the mine if he didn’t sign, while the director was hospitalised and “medically incapacitated” with a formal doctor note apparently submitted before signing.Amsa said it did not coerce Manngwe’s director and told Business Day that the relevant commercial terms had already been negotiated and agreed before the document was signed.“Amsa representatives did not attend any hospital, did not arrange any signing process in a medical setting and did not coerce Mr Nesongozwi or any representative of Manngwe Mining into signing documentation,” it said.“Amsa’s understanding is that the documents were handled internally within Manngwe Mining by its own representatives. Furthermore, negotiations between the parties continued for a considerable period thereafter, which is contrary to the allegation that Amsa imposed or enforced an improper arrangement.”Amsa said it is concerned by the group’s “attempts to retrospectively characterise a complex commercial dispute as racial discrimination”.It affirmed that “the issues between the parties were commercial and operational in nature, including supply security, ore quality, pricing, production capability and long-term sustainability considerations.”“Despite these issues, it is important to emphasise that Amsa continued to engage in discussions with Manngwe for an extended period precisely because Amsa was attempting to find a commercially sustainable path forward and to assist in resolving these concerns, rather than taking steps (as it would have been entitled to do) that would have had an adverse effect on Manngwe Mining.”In November 2024, Amsa ceased all iron ore purchases from Manngwe, resulting in the junior miner’s steady collapse. According to Manngwe, it received a formal demand to wind down the mine by end-May 2026 from another company involved in funding its development, and will be forced to retrench its 260 employees.Amsa said its conduct “did not discriminate against Manngwe Mining but instead supported the company through a difficult period and ArcelorMittal South Africa can hardly in these circumstances be blamed for its subsequent closure”.Competition Commission spokesperson Siyabulela Makunga said the commission has received the complaint and told Business Day that the matter is undergoing screening, adding that it would be premature to comment.Business Times