[miningmx.com] — KUMBA Iron Ore has not engaged Imperial Crown Trading 289 (ICT) and “hoped not to” as it does all it can to prevent that group from taking a stake in its Sishen mine, said Kumba CEO Chris Griffith.
ICT was awared a prospecting right over thte 21.4% stake previously held in the Sishen Iron Ore mining right by ArcelorMittal SA. The rest of Sishen, a 40 million tonnes/year mine, is owned by Kumba.
Kumba has appealed the granting of that right by the Department of Mineral Resources (DMR) to ICT. Kumba, South Africa’s largest iron ore producer, had applied for a mining right over that 21.4% portion of the Sishen mine, but the DMR decided to award a prospecting right to ICT, which applied on the same day for the stake.
In terms of mine legislation, if there are competing applications made on the same day for a right the DMR must favour the one from historically disadvantaged South Africans.
“It is not possible to comment at this stage on how the award of that right to ICT would affect our business. Our priority is to stop ICT from getting that interest,” Griffith said during a media visit to the Sishen mine.
“We have engaged with the DMR a number of times and they understand why we are appealing the granting of the prospecting right to ICT,’ he said.
The DMR has said it is reviewing the process after receiving formal complaints from Kumba.
There have been suggestions that the application by ICT mirrors the wording of the Kumba application too closely to be coincidence. Senior figures in the DMR have raised the prospect that someone within Kumba or the law firms dealing with the application passed on information to the politcally connected individuals who are directors at ICT.
The alternative is that someone within DMR passed on the information, but this will form part of the review process.
ArcelorMittal is taking legal action against Kumba, which stopped supplying it with 6.25 million tonnes/year iron ore at cost plus three percent after the steel maker let its old-order rights to the 21.4% stake lapse at the end of April 2009 and did not renew it.
Kumba has said it will charge commercial rates for its iron ore, something ArcelorMittal has warned could lead to plant closures. ArcelorMittal has bumped up its steel prices by R600/tonne to pay for the more expensive iron ore, with the intention of returning that extra fee to clients if the arbitration hearing goes in its favour and Kumba is obliged to sell it cheap iron ore again.
The matter is likely to take years and analysts said the plan to return the levy to steel users would be an administrative nightmare for South Africa’s dominant steel maker.
