ArcelorMittal SA deal with ITC premature - CEO

Monday, Feb14, 2011

Ms Nonkululeko Nyembezi Heita CEO of steel producer ArcelorMittal South Africa said that it's discussions of a controversial black empowerment deal with Imperial Crown Trading last year may have been premature.

She added that "There is no proposal on the table for shareholders and it remains subject to shareholder approval."

She said that the discussions in 2010 were a little bit premature. Shareholders had expressed various reservations and criticisms about the deal, and these will be taken into account.

Ms Nyembezi Heita said that they did not want to take a decision on the empowerment deal, or buying ICT until the court case was assessed on its merits. She added that "The whole issue is that we must be apprised of all the factual matrix before we move forward."

She said that ICT's legal ownership of the mining right in Sishen was a condition of the deal, and that was the subject of the court case, so the outcome of the court case was important. She added that "It all depends on what comes out as the court process unfolds. Clearly we can't sit in this limbo forever."

The company announced in August 2010 that one of its subsidiaries would buy ICT for ZAR 800 million as long as ICT was awarded mining rights for the portion it held in Sishen mine in the Northern Cape Ä one of the world's largest and richest iron ore mines. The deal was also conditional on legal battles over its stake in the mine being resolved in ICT's favor. At the time, it was also announced that ICT shareholders would be included in a black economic empowerment deal with ArcelorMittal. Shareholders in ICT include Mr Duduzane Zuma, the son of President Mr Jacob Zuma, and Mr Atul Gupta. The Gupta family has close links to the ruling ANC.

The announcement came after ArcelorMittal did not renew its 21.4% old order mining right in the Sishen mine, into a new order mining right by the deadline last year. Sishen Iron Ore Company, a subsidiary of Kumba Iron Ore Limited, which owns the rest of the rights in the Sishen mine, applied for the 21.4% stake. ICT however, also applied for the right, and was granted it. This has led to a court battle involving Kumba, ICT and the mineral resources department.

In 2001, as part of Iscor's unbundling, it was agreed that a 21.4% stake in mineral rights of the Sishen mine would vest in the company that is now ArcelorMittal SA. At the time it was agreed that Sishen would supply ArcelorMittal SA with iron ore, at up to 6.25 million tonnes a year, at cost plus 3%. When ArcelorMittal SA failed to renew its 21.4% stake in part of the Sishen mine, Kumba said it would sell its iron ore to the steel giant at market prices. ArcelorMittal objected, and this was not the subject of arbitration.

(sourced:www.iol.co.za)