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Friday, January 28, 2011

S.Africa may ask for low-price iron ore deal: paper

Friday, 28 Jan 2011
JOHANNESBURG (Reuters) -South Africa may ask Kumba Iron Ore to enter into a preferential iron ore supply deal with politically-connected Imperial Crown Trading, Business Day reported on Friday, citing a senior government official.
Kumba lost a battle for mine rights over a stake in its Sishen mine that was previously held by ArcelorMittal's South African unit. The deal entitled the steelmaker to source ore from Kumba at a discount.

After ArcelorMittal failed to renew its rights, both Kumba and little-known ICT applied. The government granted ICT prospecting rights over the mine stake and rejected Kumba's application. The iron ore producer vowed to fight the government decision in court.
ICT has subsequently applied for a mining right.

"If this application is granted, the overwhelmingly likely result will be that (Kumba) and ICT would have to negotiate in good faith in order to procure an arrangement along the lines contained in the supply agreement," Sandile Nogxina, director general in the minerals department, was quoted as saying in court papers.

A preferential deal with ICT would pave the way for ArcelorMittal, which said last year it would buy ICT, to source discounted iron ore once more.

But it would raise further questions about the management of mining rights in South Africa.
Various disputes in 2010 tarnished the image of South Africa as a destination for international mining investment, despite it being the world's biggest platinum producer and number three gold producer.(sourced:af.reuters)

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