Johannesburg - Afrox, the gas and medical conglomerate, and Iscor, the steel giant, have resolved their row over a Pretoria oxygen plant, before it ignited into an explosive courtroom battle.
Afrox had contemplated legal action against Iscor following the closure of the latter`s Pretoria steel plant in August 1997.
This decision had a knock-on effect on a neighbouring air separation oxygen plant which Afrox had built, on the understanding that Iscor would purchase most of the oxygen produced there.
Royden Vice, the chief executive officer of Afrox, said his company had agreed to build the Pretoria facility on promises of 15 years of sales to Iscor.
He added that Afrox constructed twin plants, each producing 700 tons a day of liquid oxygen, at a cost of R220 million.
Iscor was contracted to use 850 tons a day, with the balance being offered to various other clients.
The price of the oxygen sold to Iscor was negotiated to reflect Afrox` capital investment.
"They then asked that both of us should close down our plants and walk away," said Vice.
He added that Afrox insisted at the time of the Iscor closure that it still required a return on the capital it had invested.
One of the twin oxygen plants has been closed down, while the other is still operating.
Following a painful negotiation, which at one stage appeared to be heading for the courts, Vice has revealed that Iscor and Afrox have agreed on a formula to compensate the oxygen producer for the steelmaker`s actions.
"We have come to an agreement which is reasonable to both parties," said Vice.
He said there was still a requirement to have a return on Afrox` capital investment at the mothballed plant, and an arrangement has been reached on this.
Afrox was being partly compensated through orders to supply oxygen to Iscor`s remaining steel plants and an additional financial arrangement, the details of which he could not disclose.
Phaldie Kalam, Iscor`s communications chief, confirmed that a deal had been struck in principle, but said a detailed figure had yet to be finalised.
Afrox gained 10c to R11,40, while Iscor gained 75c to R21,25 on the JSE yesterday.