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ANC tentacles in Sishen mineral rights

Jan de Lange | Thu, 18 Mar 2010 08:59
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[miningmx.com] -- AN unknown company with prominent ANC figures as its shareholders has reportedly been granted prospecting rights for the 21.4% share in Sishen's mineral rights which, up to last month, belonged to ArcelorMittal.

Kumba, which owns Sishen, one of the world's biggest iron-ore mines, announced the news on Wednesday, but did not disclose the name of the company.

Sake24, Miningmx' sister website, however understands that it is a completely unknown entity that has apparently never before been involved in mining, with prominent ANC shareholders.

Kumba, which itself applied to the Department of Minerals and Energy for mining rights in order to access the mineral rights, has appealed the department's decision.

At the time of publication it was not clear what the outcome would be, especially as Kumba has been mining the extensive Kathu area in the Northern Cape for decades through its subsidiary, Sishen Iron Ore.

An observer of the process points out that prospecting rights have been awarded to this third party, and not mining rights.

How can anyone prospect in an area that has already been mined for 40 years, asked the source.

Sandile Nogxina, director-general for mineral resources, told Bloomberg that holders of prospecting rights had the exclusive right to apply for mining rights.

He said that if prospecting rights are awarded to someone, no-one else can be given the mining rights.

Another point is that ArcelorMittal is the only likely buyer of ore mined on the basis of these rights.

Until last month Mittal paid cost-plus-3% for 6.25m tons of iron ore from Sishen a year, based on its 21.4% stake in the mine's mineral rights.

It will now probably pay cost-plus-5% or 6%, while the third party will pocket the 2% or 3% difference without lifting a finger, the source observes.

- Sake24.com

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