S.Africa says Kumba mine right bid "fraudulent"- paper

Thursday Jan 27, 2011
* Govt rejects Kumba's application for disputed mining right
* Govt says Kumba's application "irregular, misleading"

JOHANNESBURG Jan 27 (Reuters) - South Africa has rejected Kumba Iron Ore's bid for a disputed mining right because its application was "fraudulent" and "premature", Business Day reported on Thursday, quoting a letter sent to the company.

The iron ore producer, a unit of Anglo American , applied for the mining right over a 21.4 percent stake in its Sishen mine that was previously held by ArcelorMittal South Africa .
The 21.4 percent stake was the base of a preferential iron ore supply deal between the two companies which Kumba cancelled in February after ArcelorMittal failed to convert its right over the stake into new mining rights, as required by law.
The government subsequently awarded a prospecting right over that stake to Imperial Crown Trading, a little-known company with close ties to high-ranking government officials. Kumba has been contesting the award of the prospecting right in court.

The paper said the government dismissed Kumba's application partially because of the "irregular, misleading and fraudulent manner" in which it was submitted and because it lacked environmental management plans, as required by the minerals act.
According to the government, Kumba had submitted its application before ArcelorMittal's right had expired.

The iron ore producer was not immediately available to comment.
Various disputes over mining rights 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.
(Reporting by Agnieszka Flak, Editing by Ed Cropley, sourced reuters)