Kumba and Mittal in talks on new prices

Kumba Iron Ore and ArcelorMittal start talks over new pricing deal on ore.

Monday09, 2011
Allan Seccombe

KUMBA Iron Ore and ArcelorMittal, SA’s largest steel maker, have started talks about a new pricing deal on ore ahead of an arbitration hearing to resolve a dispute between the two.

Kumba, SA’s largest iron-ore producer and a 64%-held Anglo American subsidiary, terminated a cost-plus-3% iron-ore supply agreement with ArcelorMittal after the steel maker failed to convert an old order mining right over 21,4% of the Sishen mine.

ArcelorMittal has rejected Kumba’s actions and the matter will go to arbitration in the second quarter of next year.

The government is anxious for a cheap supply of domestic steel in the economy to fuel growth and it was closely involved in persuading the two sides to reach an interim pricing agreement until the matter is decided in arbitration.

The interim pricing agreement runs from March 1 last year to end- July this year .

ArcelorMittal pays $50 a ton for ore bound for Saldanha and $70 for inland mills.

This is $20 and $40 a ton more than paid under a highly favourable deal Kumba terminated at the start of March last year.

Kumba has brought a high court case against the Department of Mineral Resources and Imperial Crown Trading, which now holds a prospecting right over the 21,4% stake in Sishen.

The department awarded Imperial the prospecting right in a process that was flawed, Kumba has argued in an attempt to have the decision overturned.

The review will be heard in the Pretoria High Court in the week from August 15.

There will be no witnesses or cross-examination during the hearing, which entails each party’s lawyers presenting arguments to the judge.

The department has rejected Kumba’s mining right application for the stake in Sishen, calling the filing of the application premature and fraudulent because it was postdated.(sourced BusinessDay)