[miningmx.com] — KUMBA Iron Ore has added ArcelorMittal SA (Amsa) as a respondent in its high court application to have the 21.4% prospecting right over Sishen mine awarded to Imperial Crown Trading 289 (ICT) reversed, saying the steel maker would be significantly affected whatever the outcome of the review.
Raising the issue while delivering the group’s annual results for the period to end-December 2010, CEO Chris Griffiths also said Kumba is appealing the department of mineral resources’ (DMR’s) decision to reject its application for the prospecting right.
“We’re disagreeing over the way that the DMR has acted in this regard because we believe they should be an unbiased regulator,’ he said.
However, Griffith said the DMR has given Kumba written confirmation that it won’t issue a mining right to ICT before the court review has been completed. Kumba said in early January it was seeking an urgent interdict on the matter, following the DMR’s acceptance of ICT’s mining right application in December.
Both Kumba and ICT applied for the 21.4% prospecting right in Sishen, previously held by Amsa, following the steel maker’s failure to apply for renewal prior to the deadline on April 30 2009.
The right was subsequently awarded to ICT, in a process Kumba alleges was fraudulent. Amsa since undertook to take over ICT, provided it holds on to the right.
“The matter of the high court review seeks to let the court overturn the decision by the DMR to grant ICT a prospecting right on Sishen,’ said Griffith. “Secondly (the court would provide clarity on) the issue of the multiple ownership of undivided mining rights.’
The DMR has already filed an answering affidavit to Kumba’s claims. ICT is expected to do so within days.
The separate arbitration process was set in motion to determine whether the agreement whereby Kumba was supposed to supply ore to Amsa at a price of cost plus 3% would be concluded towards the end of the year or early in 2012, Griffith said.
An interim pricing arrangement – whereby Kumba supplies iron ore to Amsa’s inland plants at $70 per tonne free-on-rail and at $50/t delivered to the Saldanha plant – expires in the second half of the year. According to Griffith, the parties would have to decide by April on an extension of the interim agreement.
Kumba chief financial officer Vincent Uren said the higher prices paid by Amsa added $125m to Kumba’s earnings before tax figure for the financial year. However, he said that Amsa managed to save between $300m to $500m over the same period by not having to pay market-related prices.
Earlier on Thursday, Kumba said a surge in iron ore export prices and sales volumes helped it to more than double its headline earnings to R14.3bn, up 106% from 2009’s R6.9bn.
