Kumba reaches Faleme Project settlement

[miningmx.com] — KUMBA Iron Ore, which is 64% owned by Anglo American, on Friday announced that it has reached a settlement agreement with the Republic of Senegal and La Society des Mines De Fer Du Senegal Oriental (Miferso), Senegal’s state-owned development company, concerning the Faleme Project.

“The parties are pleased to announce that following the arbitration award rendered
in July, a mutually agreed settlement agreement has been concluded between the
parties,” Kumba said in a statement.

Kumba, which initiated arbitration proceedings in 2007 under Kumba International, said the arbitration proceedings were confidential in nature and that the parties had
agreed that the precise terms of the settlement agreement would remain confidential.

“In reaching this settlement agreement, Kumba has taken into consideration the
interests of the people of Senegal,” the group said.

It added that a significant portion of the amount recovered by Kumba International
would be committed over a five-year period to social and community development
projects in Senegal.

Kumba first announced its plans to invest in Senegal’s Faleme iron ore project back
when it signed an exploration agreement with Miferso in July 2004.

The agreement granted Kumba the right to conduct and develop a pre-feasibility
study on the project and an option to acquire an 80% interest in the project from
Miferso before embarking on a bankable feasibility study.

But Senegalese government disputed the interest in 2005.

Negotiations with the government of Senegal to find an amicable solution continued from the time. It disputed Kumba’s interest in 2005 and until early February 2007 but the prospect of further pursuing the project ended when Arcelor Mittal announced in late February that year that it had signed agreements for the
development of iron ore deposits at Faleme.

In April 2007 Kumba was ordered to withdraw from the Faleme area, in the south eastern region of Senegal, in April despite having have resumed its exploration

Kumba felt the government violated its rights by granting the rights to the project to ArcelorMittal despite an exploration agreement between Kumba and Miferso.

The company said it had been “denied its rightful participation” in the project.

ArcelorMittal, the world’s largest steelmaker, in the meantime moved ahead with
the disputed iron ore project.

However, in July last year the steelmaker suspended the project as a result of the
global economic downturn.

The $2.2bn project was due to begin producing iron ore in 2011 and full production capacity was estimated at 25 million tonnes per year.

ArcelorMittal has hinted that it will restart its West African projects this year.