[miningmx.com] — ARCELORMittal is reviewing its management system in the wake of the Kumba Iron Ore debacle that has dominated business headlines for the past six months.
ArcelorMittal CEO Nonkululeko Nyembezi-Heita said an external audit firm had been called in to do an assessment study.
She told financial media and analysts at the presentation of the group’s interim results in Johannesburg on Wednesday that “we run an enterprise risk management system within the company, and it is a very good process in our estimation.
“The auditing firm will look at our system and what we are doing, and will determine if it is sound as we believe it to be. The firm will look critically at what we have done.’
Nyembezi-Heita rejected media reports that the resignation of chief financial officer Kobus Verster was linked to possible repercussions over the Kumba dispute, and that a major management “shake-up’ was looming at ArcelorMittal.
She said: “We just shook our heads over those headlines. All of these conclusions being drawn are based on gut feel and speculation.
“We cannot say anything during the arbitration process because it could be used against us, but ArcelorMittal’s decision to keep quiet is not helping us with the media speculation that is going on.’
Asked about management’s risk assessment regarding the rights that ArcelorMittal had held in the Sishen mine, Nyembezi-Heita said the course of action taken had been based on both the new mining legislation and the iron ore supply agreement.
She stressed ArcelorMittal’s contention that the validity of the mining rights and the validity of the iron ore supply agreement were two separate issues.
“Nowhere is there a clause that links iron ore supply to ownership of the mining rights. It does not exist.’
Interviewed afterwards about what ArcelorMittal may be doing to recover its rights in the Sishen mine, Nyembezi-Heita told Miningmx: “We have made inquiries to the Department of Mineral Resources (DMR) and been told we have no legal standing in the mining rights issue because we did not apply for conversion of our mining rights.’
Asked about market speculation that ArcelorMittal was considering buying a controlling stake in Imperial Crown Trading – the company to which a prospecting right over ArcelorMittal’s former stake in Sishen has been awarded – she replied: “No comment. I cannot comment on Imperial Crown Trading at all.’
The assessment by external auditors will be the second such exercise carried out at ArcelorMittal. It had previously brought in a team to review the group’s situation on the various cases brought against it by the Competition Commission.
Nyembezi-Heita commented that the compliance review “has given us clearance over the “big ticket’ items on allegations of price setting’.
So far one case has been referred by the Competition Commission to the Competition Tribunal, with the recommendation that ArcelorMittal pay a fine equivalent to 10% of its 2008 turnover.
Asked by an analyst why ArcelorMittal had not made a financial provision against this in its accounts, Nyembezi-Heita replied: “We will offer a robust defence against this and we are in the very early stages of preparing that defence.
“We do not accept that this matter is going to come before the tribunal any time soon. There is still a legal wrangle going on over access to certain documents.’
The balance sheet showed ArcelorMittal had cash on hand amounting to R5.2bn at end-June.
Asked why the group was retaining so much cash and not either investing it or paying it out in dividends, Verster replied: “We agree spare funds should be invested for growth or returned to shareholders.
“The issue was discussed at the last board meeting. The decision was that, in the current environment where we have various uncertainties and risks, the situation would be looked at again in the latter part of the year.’