SDS drill hits hard ground with IDQ

A DRIVE by South Australian mining supply business SDS Corporation to increase its market share of specialised mining drill bits and hammers has hit a hurdle in Western Australia.

Embarking on yet another of its expansionary acquisitions, SDS has become bogged down in litigation with the controlling share-holder of its latest target WA-based International Drill Quip and found the deal being investigated by the Australian Competition and Consumer Commission.

ACCC correspondence obtained by WA Business News indicates it has reservations about SDS’s proposed purchase of IDQ’s business.

In one letter, ACCC mergers and assets general manager Mark Pearson says the proposed acquisition “would or would be likely to have the effect of substantially lessening competition in the market for reverse circulation drill hammers and bits and consequently breach section 50 of the Trade Practices Act”.

SDS Corporation company secretary Kevin Benson said the ACCC’s comments regarding the deal were a concern.

However, Mr Benson claimed the matter was still under investigation by the regulator.

He added that the company was gearing up for growth after a static period and awaiting the outcome of a decision by Justice Len Roberts-Smith regarding its WA Supreme Court fight with Ted Rear’s Pasdonnay Pty Ltd, which controls IDQ.

The decision has been reserved until next year and centres around SDS Corporation’s claim that Pasdonnay withheld information from the due diligence process of the asset sale agreement.

IDQ is one of the last remaining Australian manufacturers and suppliers of RC drill bits and hammers used in mining processes and exploration.

It is understood that SDS offered to buy IDQ’s assets in July 2002 but, in October 2002 legal action was commenced by SDS after negotiations between the two parties collapsed.

The IDQ deal is not SDS’s only recent foray into WA.

In April, SDS settled the purchase of another Australian manufacturer and supplier of RC drill bits and hammers, Nautronix Ltd’s mining division which was made up of manufacturer Premier Rock Tools and supplier Seismic Supply International Pty Ltd.

Subsidiaries of SDS and Nautronix were involved in litigation with each other but settled the matter, regarding patent infringements, before the sale was completed.

Since forming in 1978 as Specialised Drilling Services, SDS Corporation has amassed nine mining supply and manufacturing divisions, several international offices and along the way acquired or merged with four mining supply companies.

Some of those companies also manufactured and supplied RC drill bits and hammers and SDS has said that the RC market figures highly in its growth strategy.