[miningmx.com] — KUMBA Iron Ore on Tuesday gave some reasons as to why it shouldn’t be compelled to supply iron ore to ArcelorMittal SA (Amsa) at a discount, arguing its obligation to the steelmaker had lapsed at the “destruction’ of Amsa’s 21.4% mineral right over Sishen mine.
The arguments were delivered during the North Gauteng High Court case over the present status of the 21.4% old order mineral right which Amsa held prior to April 30 2009. By virtue of the right, Amsa was entitled to the delivery of 6.25 million tonnes per year of iron ore mined from Sishen at a price of cost plus 3%.
Delivering arguments on the legal effect of Kumba subsidiary Sishen Iron Ore Company’s (Sioc’s) successful conversion of its 78.6% older order right and Amsa’s failure to do so, Kumba’s Senior Counsel Chris Loxton said the old order rights had in effect placed a limitation upon each holder’s right to dispose, at a profit, of what was mined.
“For so long as Amsa continued to own a 21.4% undivided share of the right to iron ore, Sioc would have been obliged to account to Amsa for its share of what it mined,’ Loxton said. “That obligation arose from Amsa’s right of ownership in the severed ore.
“The question which arises is what the consequences are of the destruction of Amsa’s undivided 21.4% share in the right to iron ore by virtue of the provisions of the MPRDA.
“.the effect of that destruction is that since the right to a share of the iron ore mined was from May 1 2009 no longer held by anyone, neither did Sioc’s obligation to account to some person for 21.4% of such iron ore survive.’
Loxton said it was important to note that this consequence didn’t results because Sioc had by some process acquired Amsa’s share of the right to iron ore. The same result would have followed had Amsa waived its right to a share of the ore mined by SIOC.
Amsa argued on Monday that the Mineral and Petroleum Resources Act (MPRDA) didn’t provide for the granting of fractional rights, in effect absolving it of the responsibility to have applied for its previously held 21.4% right – and would as a consequence had no bearing on its iron ore supply agreement with Kumba. This supply agreement would be the subject of an unrelated arbitration process between the parties.
Kumba maintains it has only converted a 78.6% right to Sishen into a new order mineral right.
ONLY SISHEN MAY APPLY FOR RIGHT
In addition to arguing Imperial Crown Trading 289’s (ICT’s) subsequent application for a 21.4% right was fraudulent and the regulatory processes which had it awarded being flawed, Kumba also said it was the “sole competent applicant’ in terms of the MPRDA to lay claim to the right.
“(The MPRDA) does not contemplate the grant of a prospecting right in respect of property on which another person holds an old order mining right (whether converted or not) and on which such person continues to mine,’ Loxton said.
“.the notion that there may be an undivided share in a right to prospect independent of an undivided share in a right to the minerals. is simply a legal nonsense.’
