Sishen judge chides fighting parties

André Janse van Vuuren | Wed, 21 Dec 2011 03:38

[miningmx.com] -- JUDGE Raymond Zondo has released his judgment in the case over the disputed right in Sishen Iron Ore mine after ruling in favour of ArcelorMittal SA (Amsa) last week, castigating all parties for the way in which they’ve handled the matter.

In a 56-page document Zondo gave a fully reasoned explanation why Amsa acted correctly in not applying for the conversion of a 21.4% stake it held in an old order mineral right in Sishen. At the same time, he dismissed Sishen Iron Ore Company’s (Sioc’s) argument that the 21.4% became up for grabs following the expiry of all unconverted old order rights – in terms of the Mineral and Petroleum Resources Development Act - on May 1 2009.

Sioc had claimed it was only granted a 78.6% right in Sishen after it applied for a conversion in 2005, while Amsa argued a full right had been applied for and granted at the time.

Zondo didn’t elaborate on the merit of the application made by Imperial Crown Trading 289 (ICT), which was awarded the 21.4% right, apart from saying the department of mineral resources erred in accepting an application for a right that had in effect already been granted. He ordered the right to be declared void.

Zondo followed the origin of the mineral right back to the unbundling of Amsa’s predecessor, Iscor, when the steelmaker transferred a 78.6% stake in Sishen’s mineral right to Sishen Iron Ore. The deal also made provision for the supply agreement whereby Sishen had undertaken to provide Iscor/Amsa with 6.25 million tonnes of iron ore per year.

“It is common cause that during the period before 1 May 2004 Sishen and Iscor were co-holders, or joint-holders, of undivided shares in the right to iron ore in (Sishen mine),” Zondo said.

“…it needs to be pointed out that the Director: Mineral Development had issued two identical documents to both Iscor and Sishen in which the holder of the mining authorisation was reflected as Iscor and Sishen.”

Following the implementation of the MPRDA, Zondo said Sishen’s application for what it later argued was only the conversion of 78.6% of the mining right never mentioned such a division or stake. Neither did the DMR’s granting letter.

“In my view Sishen did not lodge a 78.6% undivided share to the right to iron ore for conversion. In my view Sishen lodged a full 100% old order mining right,” Zondo said.

“It did not in the document that it prepared for lodgement make any reference to the conversion of a 78.6% share of anything. If there was a reference to a 78.6% it appeared in some annexure that contained a reference to such percentage.

“Sishen simply prepared its documents in a manner which made it very clear that it was lodging a full old order mining right with no restriction.”

Zondo said if Amsa had attempted to lodge an old order mining right after the DMR had granted Sishen the sole and exclusive mining right to iron ore in Sishen, the department would not have been able to legally convert such a right.

“Since Sishen already holds a mining right for iron ore, the Regional Manager would be precluded…from accepting an application for a prospecting right for iron ore.

“That hurdle would be insurmountable.

“ICT seems to have got away with that in this case because it was granted a prospecting right.”

Zondo said he accepted that the result of the judgment was unusual in the sense that a party which believed it did not have a full 100% mining right was found to have such right, blaming the parties’ reluctance to communicate with one another as a major reason for the dispute.

“This matter could have been handled better by all parties involved,” he said.