[miningmx.com] — CONTROVERSIAL mining company Imperial Crown Trading 289 (ICT) will have to defend itself convincingly against allegations of forgery if steel giant ArcelorMittal South Africa (Amsa) is to go through with the buyout of the firm.
Amsa CEO Nonkululeko Nyembezi-Heita said on Tuesday that to date, ICT has yet to file any of the documents Amsa requested to clear its name against rival Kumba Iron Ore’s allegation of impropriety when it obtained prospecting rights to a stake at the Sishen Iron Ore mine.
Kumba has claimed that ICT duplicated its application for a 21.4% prospecting right over the Sishen mine, which Amsa forfeited in 2009.
“In the midst of acquiring a company that you also want to make your partner, it is prudent that you analyse everything,’ said Nyembezi-Heita.
“With both the acquisition and the black economic empowerment deal proposed, we must be satisfied by the factual metrics and if we are, we will continue,’ she said.
Despite media speculation that Amsa’s takeover of ICT was a done deal, the firm said that no agreement had been concluded.
“We will let the legalities and due diligence run its course and until the matter is solved, we will not take any decisions. It all depends on the outcome of the High Court,’ said Nyembezi- Heita.
“There is no proposal on the table for shareholders… and it remains subject to shareholder approval,” she told media in Johannesburg following the release of the company’s annual results for the year ended December 2010.
The discussions in 2010 were a “little bit premature”. Shareholders had expressed “various reservations and criticisms” about the deal, and these will be taken into account, she said.
The company announced last August that one of its subsidiaries would buy ICT for R800m, as long as ICT was awarded mining rights for the portion it held in the Sishen mine in the Northern Cape – one of the world’s largest and richest iron ore mines.
The deal was also conditional on legal battles over its stake in the mine being resolved in ICT’s favour.
At the time, it was also announced that ICT shareholders would be included in a black economic empowerment deal with ArcelorMittal.
Shareholders in ICT include Duduzane Zuma, the son of President Jacob Zuma, and Atul Gupta. The Gupta family has close links to the ANC.
ACQUISITION APPETITE
Amsa has been looking into potential mining companies which could be possible acquisitions for the steelmaker, she said.
With capex sitting at R1.9bn this year, Amsa has the appetite for possible purchases.
“We were interested in buying Cisco (Cape Town Iron and Steel Works), but that obviously didn’t work out. We are not looking to buy steel plants though, we are looking into mining companies,’ she said.
“We’ve had a look at a property and assessed its resource so we stand a good chance with acquiring that one,’ Nyembezi-Heita said, without disclosing which firm was in Amsa’s sights.
“There are other properties out in the Northern Cape, but they are too small – compared to Sishen – to seek out. If all the small to medium properties came together they would provide something meaningful, but of course someone has to fill the role of being the concentrator.’
Amsa was willing to play this role despite the fact that yields would not be as high as mining Sishen, she said.
“We have that appetite and if we could get the Sishen mine back we would in a flash.’
IN THE BLACK
Earlier on Tuesday, Amsa announced in its 2010 annual results presentation that it had turned around its operations from a loss of R478m to R1.3bn in attributable earnings this year.
Headline earnings per share improved from a loss of 104 cents in 2009 to a profit of 343c in the comparative period ended December 2009.
Amsa’s revenue increased slightly from R25.59bn to R30.22bn, despite the global steel sector being caught in a margin squeeze since mid-2010.
“A significant turnaround in earnings is anticipated for the first quarter (in) 2011 compared to the loss for the last quarter of 2010,” the company said.
Growing demand for steel and higher global prices would boost earnings in the first quarter of 2011.
However, earnings would be partially offset by rising prices of raw materials, mainly scrap, it said.
