Thu Dec 15, 2011
PRETORIA (Reuters) - A South African judge ruled on Thursday that a company with no mining experience and business links with President Jacob Zuma's son could not keep mineral prospecting rights it was awarded.
South Africa previously awarded Imperial Crown Trading the right to prospect for minerals at the Sishen mine operated by Kumba Iron Ore, a unit of global miner Anglo American.
The stakes went far beyond one commercial dispute.
ArcelorMittal South Africa had allowed the right to lapse in 2009, putting in jeopardy a lucrative multi-billion rand supply deal it had with Sishen that allowed it to source iron ore at a discount.
Judge Raymond Zondo also said he agreed with ArcelorMittal's contention that Sishen held 100 percent of the right to the operation and it was not open for anyone to apply for the lapsed right.
ArcelorMittal says this means its supply agreement remains in force.
"The judgement of the High Court serves to confirm our view that Sishen remains obliged to supply 6.25 metric million tonnes of iron ore to us at cost plus three percent in terms of our agreement," ArcelorMittal said in statement.
The group's share price rose more than 5 percent after the verdict.
Kumba disagreed that the decision had any bearing on the supply dispute, which is being fought out in a separate arbitration process.
"Kumba remains convinced that the contract lapsed and this judgment does not change that," a spokesperson for Kumba said.
Thursday's judgement was the latest twist in a long and complex saga, and ICT immediately signalled it would appeal.
"Certainly we will appeal. We do not agree with the judgement. It is contrary to what we have been contending all along," ICT lawyer Ronnie Mendelow told journalists after the ruling.
One of ICT's owners has business connections to Zuma's son, Duduzane, and the awarding of the right had rattled investor confidence in Africa's largest economy as it focused unflattering attention on the issue of crony capitalism and political favouritism.
"One of the uncertainties of the mining industry has been the security of tenure, and investment has pulled back, so if anything this judgement may encourage investment," said Chris Hart, economic strategist at Investment Solutions.
"My instinct is that policy and procedures need to follow best practice. My sense is that we are moving back to best practice and a defendable process of awarding mineral rights," he said.
The full judgement with the reasons for the decision will be given on Tuesday, and South Africa's department of mineral resources said in a statement it would not comment before then.
(sourced Reuters)
Showing posts with label Arcelor Mittal SA. Show all posts
Showing posts with label Arcelor Mittal SA. Show all posts
Thursday, December 15, 2011
Anglo American and ArcelorMittal SA await ruling on iron ore permit
Thursday, 15 Dec 2011
It is reported that a South African court will rule tomorrow on whether the state was correct to award a prospecting right over the country's largest iron ore mine to a company whose owners include a business partner of President Mr Jacob Zuma's son.
ArcelorMittal South Africa Limited in June 2011 joined Anglo American Plc unit Kumba Iron Ore in asking the North Gauteng High Court in Pretoria to overturn the award of a 21.4% right at the Sishen iron ore mine, previously held by ArcelorMittal South Africa, to closely held Imperial Crown Trading 289 (Pty) Limited. ICT's owners include Mr Jagdish Parekh, a business partner of Mr Zuma's son, Mr Duduzane. Kumba holds the rest of the Sishen right through Sishen Iron Ore Co, which is partly owned by Exxaro Resources Limited.
Mr Mohamed Kharva, an analyst at Nedgroup Securities Limited, said that "It will go against anyone’s logic if ICT gets the right."
ArcelorMittal South Africa's Sishen right lapsed after the Vanderbijlpark based steelmaker failed to apply for a license by April 30th 2009 to satisfy a change in legislation. Its failure to convert the permit led Pretoria based Kumba to cancel a nine year agreement to supply iron ore from Sishen at below-market prices to the steelmaker, saying it was linked to the mining right. That agreement is under a separate arbitration process.
Ownership of South Africa's mineral resources, previously held by mining companies or private landowners, reverted to the state when the new mining legislation was enacted in 2004 and is now allocated to companies by government officials on a first come, first serve basis.
(Sourced from www.bloomberg.net)
It is reported that a South African court will rule tomorrow on whether the state was correct to award a prospecting right over the country's largest iron ore mine to a company whose owners include a business partner of President Mr Jacob Zuma's son.
ArcelorMittal South Africa Limited in June 2011 joined Anglo American Plc unit Kumba Iron Ore in asking the North Gauteng High Court in Pretoria to overturn the award of a 21.4% right at the Sishen iron ore mine, previously held by ArcelorMittal South Africa, to closely held Imperial Crown Trading 289 (Pty) Limited. ICT's owners include Mr Jagdish Parekh, a business partner of Mr Zuma's son, Mr Duduzane. Kumba holds the rest of the Sishen right through Sishen Iron Ore Co, which is partly owned by Exxaro Resources Limited.
Mr Mohamed Kharva, an analyst at Nedgroup Securities Limited, said that "It will go against anyone’s logic if ICT gets the right."
ArcelorMittal South Africa's Sishen right lapsed after the Vanderbijlpark based steelmaker failed to apply for a license by April 30th 2009 to satisfy a change in legislation. Its failure to convert the permit led Pretoria based Kumba to cancel a nine year agreement to supply iron ore from Sishen at below-market prices to the steelmaker, saying it was linked to the mining right. That agreement is under a separate arbitration process.
Ownership of South Africa's mineral resources, previously held by mining companies or private landowners, reverted to the state when the new mining legislation was enacted in 2004 and is now allocated to companies by government officials on a first come, first serve basis.
(Sourced from www.bloomberg.net)
Tuesday, November 8, 2011
ArcelorMittal S.Africa raises steel prices
Tuesday, Nov8, 2011
JOHANNESBURG Nov 8 (Reuters) - ArcelorMittal South Africa , a unit of the world's top steelmaker, has increased steel prices effective Nov. 1, the company said on Monday.
The steelmaker said prices for flat steel products would increase by between 3 and 6 percent, depending on the product, while prices for long steel products would be raised by between 4 and 8 percent.
The company said last week that higher costs and lower steel prices hit earnings in the three months to end September.
(sourced Reuters)
JOHANNESBURG Nov 8 (Reuters) - ArcelorMittal South Africa , a unit of the world's top steelmaker, has increased steel prices effective Nov. 1, the company said on Monday.
The steelmaker said prices for flat steel products would increase by between 3 and 6 percent, depending on the product, while prices for long steel products would be raised by between 4 and 8 percent.
The company said last week that higher costs and lower steel prices hit earnings in the three months to end September.
(sourced Reuters)
Friday, November 4, 2011
Mittal suffers loss after furnace fails
Conditions in struggling South African steel industry worsen over the past quarter
Friday, November04, 2011
ArcelorMittal SA reported a R460m headline loss for the third quarter ended September, following the failure of the blast furnace system at its Newcastle works in KwaZulu-Natal, and a sharp rise in input costs.
This compares with headline earnings of R473m for the previous quarter, and R68m for the same period last year.
The group also said yesterday that operating conditions in the steel industry had deteriorated sharply over the past quarter, with the weaker trend in SA’s economy having a big effect on major steel consumers. Strike s in the sector in July hit deliveries, with customers forced to delay orders.
"It has been a difficult and challenging quarter," CEO Nonkululeko Nyembezi-Heita said yesterday. "The Newcastle incident resulted in a substantial loss of production with a concomitant effect on our quarterly results."
She said to ease the effect on customers, 240000 tons of steel was secured in SA and globally, from ArcelorMittal Group mills, and dispatched from mid-October. This still left the market short, with a knock-on effect in the mainstay building and construction sector.
Most of ArcelorMittal SA’s key drivers exhibited stable to negative trends, with raw material prices rising further, and electricity costs soaring 25%. But the firm said strong growth was experienced in Kenya and Zambia, with increased activity in the construction and mining sectors.
"Management (said) at the half-year results that the third quarter would be tough, but the Newcastle furnace issues resulted in a much poorer result," Rubin Renecke, equity analyst at Kagiso Asset Management, said yesterday. "Globally, steel demand remains sluggish ... (but) the weaker rand against the dollar should be positive for local steel pricing going forward."
Year on year, revenue in the quarter rose 5% to R7,6bn, following an 11% increase in average net realised prices, but was considerably down from R8,8bn in the preceding June quarter. Overall steel sales were flat at 1,1-million tons, with long steel products falling by 10%, while flat steel products rose 4%.
Revenue from ArcelorMittal SA’s coke and chemicals division declined 38%, following a 40% decline in commercial coke sales and an 11% drop in average net realised prices. Sales were also hampered by weaker seasonal demand from the ferro-alloy industry due to high winter electricity tariffs, and the poor state of the stainless steel industry.
Liquid steel production fell 17% to 1,2-million tons in the quarter, mainly as a result of the structural failure at Newcastle.
(sourced BusinessDay)
Friday, November04, 2011
ArcelorMittal SA reported a R460m headline loss for the third quarter ended September, following the failure of the blast furnace system at its Newcastle works in KwaZulu-Natal, and a sharp rise in input costs.
This compares with headline earnings of R473m for the previous quarter, and R68m for the same period last year.
The group also said yesterday that operating conditions in the steel industry had deteriorated sharply over the past quarter, with the weaker trend in SA’s economy having a big effect on major steel consumers. Strike s in the sector in July hit deliveries, with customers forced to delay orders.
"It has been a difficult and challenging quarter," CEO Nonkululeko Nyembezi-Heita said yesterday. "The Newcastle incident resulted in a substantial loss of production with a concomitant effect on our quarterly results."
She said to ease the effect on customers, 240000 tons of steel was secured in SA and globally, from ArcelorMittal Group mills, and dispatched from mid-October. This still left the market short, with a knock-on effect in the mainstay building and construction sector.
Most of ArcelorMittal SA’s key drivers exhibited stable to negative trends, with raw material prices rising further, and electricity costs soaring 25%. But the firm said strong growth was experienced in Kenya and Zambia, with increased activity in the construction and mining sectors.
"Management (said) at the half-year results that the third quarter would be tough, but the Newcastle furnace issues resulted in a much poorer result," Rubin Renecke, equity analyst at Kagiso Asset Management, said yesterday. "Globally, steel demand remains sluggish ... (but) the weaker rand against the dollar should be positive for local steel pricing going forward."
Year on year, revenue in the quarter rose 5% to R7,6bn, following an 11% increase in average net realised prices, but was considerably down from R8,8bn in the preceding June quarter. Overall steel sales were flat at 1,1-million tons, with long steel products falling by 10%, while flat steel products rose 4%.
Revenue from ArcelorMittal SA’s coke and chemicals division declined 38%, following a 40% decline in commercial coke sales and an 11% drop in average net realised prices. Sales were also hampered by weaker seasonal demand from the ferro-alloy industry due to high winter electricity tariffs, and the poor state of the stainless steel industry.
Liquid steel production fell 17% to 1,2-million tons in the quarter, mainly as a result of the structural failure at Newcastle.
(sourced BusinessDay)
Saturday, August 20, 2011
CITIC Group undecided on Macarthur counterbid
Saturday, 20 Aug 2011
Reuters reported that China Citic Group has yet to decide whether to launch a counterbid for Australian coal miner Macarthur Coal Ltd which is the subject of a USD 5 billion hostile takeover from ArcelorMittal SA and Peabody Energy Corp.
Citic Group together with subsidiary Citic Resources Holdings Ltd owns about 24% of Macarthur making it the single largest shareholder of the world's biggest producer of pulverised and cleaner burning coal.
Mr Chang Zhenming Citic Group Chairman without elaborating said "It is not yet time to show our stance (on Peabody offer).”
He said that separately, Citic Group said it had not yet set a timetable for an initial public offering. We are still working on an internal restructuring we don't have a timetable yet."
Last year, media reports said CITIC Group was considering a USD 12 billion listing in Hong Kong in 2011 a move that could help the state owned conglomerate raise its profile and cut debt.
(Sourced from Reuters)
Reuters reported that China Citic Group has yet to decide whether to launch a counterbid for Australian coal miner Macarthur Coal Ltd which is the subject of a USD 5 billion hostile takeover from ArcelorMittal SA and Peabody Energy Corp.
Citic Group together with subsidiary Citic Resources Holdings Ltd owns about 24% of Macarthur making it the single largest shareholder of the world's biggest producer of pulverised and cleaner burning coal.
Mr Chang Zhenming Citic Group Chairman without elaborating said "It is not yet time to show our stance (on Peabody offer).”
He said that separately, Citic Group said it had not yet set a timetable for an initial public offering. We are still working on an internal restructuring we don't have a timetable yet."
Last year, media reports said CITIC Group was considering a USD 12 billion listing in Hong Kong in 2011 a move that could help the state owned conglomerate raise its profile and cut debt.
(Sourced from Reuters)
Thursday, August 18, 2011
Kumba justifies non supply of iron ore to ArcelorMittal SA
Thursday, 18 Aug 2011 |By MiningMX
It is reported that Kumba Iron Ore gave some reasons as to why it shouldn't be compelled to supply iron ore to ArcelorMittal SA at a discount, arguing its obligation to the steelmaker had lapsed at the destruction of ArcelorMittal SA's 21.4% mineral right over Sishen mine.
The arguments was delivered during the North Gauteng High Court case over the present status of the 21.4% old order mineral right which ArcelorMittal SA held prior to April 30th 2009. By virtue of the right, ArcelorMittal SA was entitled to the delivery of 6.25 million tonnes per year of iron ore mined from Sishen at a price of cost plus 3%.
Delivering arguments on the legal effect of Kumba subsidiary Sishen Iron Ore Company's successful conversion of its 78.6% older order right and ArcelorMittal SA's failure to do so, Kumba's Senior Counsel Mr Chris Loxton said the old order rights had in effect placed a limitation upon each holder’s right to dispose, at a profit, of what was mined.
Mr Loxton said that "For so long as ArcelorMittal SA continued to own a 21.4% undivided share of the right to iron ore, SIOC would have been obliged to account to ArcelorMittal SA for its share of what it mined. That obligation arose from ArcelorMittal SA' right of ownership in the severed ore. The question which arises is what the consequences are of the destruction of ArcelorMittal SA's undivided 21.4% share in the right to iron ore by virtue of the provisions of the MPRDA."
He added that "The effect of that destruction is that since the right to a share of the iron ore mined was from May 1st 2009 no longer held by anyone, neither did SIOC's obligation to account to some person for 21.4% of such iron ore survive."
Mr Loxton said that it was important to note that this consequence didn’t results because SIOC had by some process acquired ArcelorMittal SA' share of the right to iron ore. The same result would have followed had ArcelorMittal SA waived its right to a share of the ore mined by SIOC.
He added that "Since the right to a share of the iron ore mined was no longer held by anyone, neither did SIOC's obligation to account to some person for 21.4% of such iron ore survive."
It is reported that Kumba Iron Ore gave some reasons as to why it shouldn't be compelled to supply iron ore to ArcelorMittal SA at a discount, arguing its obligation to the steelmaker had lapsed at the destruction of ArcelorMittal SA's 21.4% mineral right over Sishen mine.
The arguments was delivered during the North Gauteng High Court case over the present status of the 21.4% old order mineral right which ArcelorMittal SA held prior to April 30th 2009. By virtue of the right, ArcelorMittal SA was entitled to the delivery of 6.25 million tonnes per year of iron ore mined from Sishen at a price of cost plus 3%.
Delivering arguments on the legal effect of Kumba subsidiary Sishen Iron Ore Company's successful conversion of its 78.6% older order right and ArcelorMittal SA's failure to do so, Kumba's Senior Counsel Mr Chris Loxton said the old order rights had in effect placed a limitation upon each holder’s right to dispose, at a profit, of what was mined.
Mr Loxton said that "For so long as ArcelorMittal SA continued to own a 21.4% undivided share of the right to iron ore, SIOC would have been obliged to account to ArcelorMittal SA for its share of what it mined. That obligation arose from ArcelorMittal SA' right of ownership in the severed ore. The question which arises is what the consequences are of the destruction of ArcelorMittal SA's undivided 21.4% share in the right to iron ore by virtue of the provisions of the MPRDA."
He added that "The effect of that destruction is that since the right to a share of the iron ore mined was from May 1st 2009 no longer held by anyone, neither did SIOC's obligation to account to some person for 21.4% of such iron ore survive."
Mr Loxton said that it was important to note that this consequence didn’t results because SIOC had by some process acquired ArcelorMittal SA' share of the right to iron ore. The same result would have followed had ArcelorMittal SA waived its right to a share of the ore mined by SIOC.
He added that "Since the right to a share of the iron ore mined was no longer held by anyone, neither did SIOC's obligation to account to some person for 21.4% of such iron ore survive."
Saturday, August 13, 2011
ArcelorMittal S.Africa furnace repair needs 3 months
Aug12, 2011 |By Thomson Reuters
JOHANNESBURG (Reuters) - ArcelorMittal South Africa, a unit of the world's top steelmaker, said on Friday the failure of the furnace at its Newcastle plant would result in a loss of 400,000 tonnes in output and the financial impact would be "substantial".
It also said in a statement that the blast furnace would take about three months to repair.
"ArcelorMittal South Africa management is in the process of exploring options to augment the supply to meet the domestic customer requirements for the next three months," it said.
"The financial impact is estimated to be substantial considering the potential sales volume loss. Insurers were notified of the incident and a claim will be submitted once the actual repair costs and consequential losses are finalised," it added.
The company had said on Wednesday that the furnace at its gas cleaning plant had failed and the dust catcher had partially collapsed.
The company's outlook is already subdued.
Higher input costs and a strong rand led to a 63 percent drop in the company's first-half profit and the steelmaker forecast a difficult third-quarter, partially due to a recent strike over wages and a planned maintenance shutdown at one of its plants.
JOHANNESBURG (Reuters) - ArcelorMittal South Africa, a unit of the world's top steelmaker, said on Friday the failure of the furnace at its Newcastle plant would result in a loss of 400,000 tonnes in output and the financial impact would be "substantial".
It also said in a statement that the blast furnace would take about three months to repair.
"ArcelorMittal South Africa management is in the process of exploring options to augment the supply to meet the domestic customer requirements for the next three months," it said.
"The financial impact is estimated to be substantial considering the potential sales volume loss. Insurers were notified of the incident and a claim will be submitted once the actual repair costs and consequential losses are finalised," it added.
The company had said on Wednesday that the furnace at its gas cleaning plant had failed and the dust catcher had partially collapsed.
The company's outlook is already subdued.
Higher input costs and a strong rand led to a 63 percent drop in the company's first-half profit and the steelmaker forecast a difficult third-quarter, partially due to a recent strike over wages and a planned maintenance shutdown at one of its plants.
Monday, March 28, 2011
Kumba: S.Africa can more double iron ore output
Mon Mar 28, 2011 1:04pm GMT
JOHANNESBURG (Reuters) - South Africa's iron ore industry has the potential to more than double output in the next 10 years under suitable growth conditions, Kumba Iron Ore said in a report issued on Monday.
The report by Kumba, the world's 10th-largest iron ore producer and a unit of Anglo American, cited conditions such as necessary transport logistics and a viable market for the off-take of iron ore and steel products.
The company also said the country would need a suitable regulatory environment that encourages market participants to make the necessary investments.
"These growth projects are capital intensive and will not be economically viable without market-related iron ore prices (at export parity price levels)," the company said.
Kumba's iron ore production rose 3 percent to 43.3 million tonnes in 2010.
Kumba has been at loggerheads with ArcelorMittal South Africa, a unit of the world's biggest steelmaker, over prices for the steel-making ingredient since February last year.
A long-term deal, under which Kumba sold ore to ArcelorMittal SA at a discount, lapsed after the steelmaker failed to convert its rights over a stake in Kumba's Sishen mine into a new right as required by law.
The government now wants at least 21.4 percent of iron ore output from Kumba's Sishen mine to be sold at cost plus 3 percent to help the domestic steel industry.
But Kumba said in the report that discounted iron ore prices were unlikely to lift the local steel sector.
"Iron ore typically contributes less than 1 percent to the costs of these end products and is largely insignificant in its impact on overall costs of downstream products," Kumba said.
It added: "Even if iron ore is discounted significantly, this has an immaterial impact on the cost of most downstream users."
Pending a resolution of the dispute, Kumba and ArcelorMittal SA reached an interim agreement valid until the end of July this year for ArcelorMittal to source iron ore from Kumba at about half of the market price.
ArcelorMittal SA has said it expects the arbitration to be heard early next year and that it will negotiate with Kumba to extend the interim pricing deal until the dispute is resolved.
The government granted Imperial Crown Trading a prospecting right over the stake in Kumba's mine for which ArcelorMittal previously held a mining right, a decision which Kumba is contesting.
JOHANNESBURG (Reuters) - South Africa's iron ore industry has the potential to more than double output in the next 10 years under suitable growth conditions, Kumba Iron Ore said in a report issued on Monday.
The report by Kumba, the world's 10th-largest iron ore producer and a unit of Anglo American, cited conditions such as necessary transport logistics and a viable market for the off-take of iron ore and steel products.
The company also said the country would need a suitable regulatory environment that encourages market participants to make the necessary investments.
"These growth projects are capital intensive and will not be economically viable without market-related iron ore prices (at export parity price levels)," the company said.
Kumba's iron ore production rose 3 percent to 43.3 million tonnes in 2010.
Kumba has been at loggerheads with ArcelorMittal South Africa, a unit of the world's biggest steelmaker, over prices for the steel-making ingredient since February last year.
A long-term deal, under which Kumba sold ore to ArcelorMittal SA at a discount, lapsed after the steelmaker failed to convert its rights over a stake in Kumba's Sishen mine into a new right as required by law.
The government now wants at least 21.4 percent of iron ore output from Kumba's Sishen mine to be sold at cost plus 3 percent to help the domestic steel industry.
But Kumba said in the report that discounted iron ore prices were unlikely to lift the local steel sector.
"Iron ore typically contributes less than 1 percent to the costs of these end products and is largely insignificant in its impact on overall costs of downstream products," Kumba said.
It added: "Even if iron ore is discounted significantly, this has an immaterial impact on the cost of most downstream users."
Pending a resolution of the dispute, Kumba and ArcelorMittal SA reached an interim agreement valid until the end of July this year for ArcelorMittal to source iron ore from Kumba at about half of the market price.
ArcelorMittal SA has said it expects the arbitration to be heard early next year and that it will negotiate with Kumba to extend the interim pricing deal until the dispute is resolved.
The government granted Imperial Crown Trading a prospecting right over the stake in Kumba's mine for which ArcelorMittal previously held a mining right, a decision which Kumba is contesting.
Friday, March 4, 2011
ArcelorMittal SAfrica to up product prices from April
Fri Mar 4, 2011 2:21pm GMT
JOHANNESBURG, March 4 (Reuters) - ArcelorMittal South Africa (ACLJ.J: Quote), a unit of the world's biggest steel maker (ISPA.AS: Quote), said on Friday it would raise prices for its flat and long steel products by up to 4.9 percent from the start of April.
The unit said in a statement that it would increase prices for hot rolled coil by 3.5 percent, for plate and cold rolled coil by 3.1 percent and galvanised coil by 2.83 percent.
Prices for long steel specialty products would rise by 4.9 percent, it said. (Reporting by Ruona Agbroko; editing by Jason Neely,sourced:Thomson Reuters)
Thursday, February 24, 2011
Davies says discounted iron-ore prices should benefit downstream customers
24th February 2011
By: Loni Prinsloo
Trade and Industry Minister Rob Davies said on Thursday that companies that benefited from discounted iron-ore prices would have to pass on the discount to customers.
He said that at least 21,4% of iron-ore output from Kumba Iron Ore’s (Kumba) Sishen mine should be made available at cost plus 3% to support a cost effective steel manufacturing industry in the country.
The Minister added that excessive steel pricing in South Africa in the past had disadvantaged the downstream manufacturing industries. This comes at a time when government has made its mandate of job creation and increasing local production capacity clear.
South Africa’s largest steelmaker, ArcelorMittal South Africa (Mittal), had been receiving the benefit of discounted iron-ore prices for years, but had not been passing on this advantage to downstream consumers.
This bruised the relationship between the Department of Trade and Industry (DTI) and the steel company as the group's access to South African-mined iron-ore on favourable terms had been effectively secured for it by government in 2001, on the provison that the company extended a so-called "developmental" price to South African consumers.
The iron-ore arrangement and the pricing promise had been central to the unbundling deal that led to the creation of separate steel and mining companies from what had previously been the Iscor group.
But the steel group clung to its policy of pricing steel on an import parity basis, later converting to a benchmarked pricing model, which led to a breakdown of trust between the DTI and Mittal.
Last year, Mittal lost its 21,4% Sishen mining right after failing to convert its stake into a new-order mining right as required by South African law.
Kumba’s Sishen Iron Ore Company applied for the mining right, but instead, a prospecting right was granted to Imperial Crown Trading (ICT). However, Kumba has now taken the matter to court as it believed that the granting of ICT’s prospecting licence was unlawful.
Nevertheless, Davies said that whoever took hold of South African resources in the future, had to take on the responsibility of looking after the country’s economical interests.
He said that at least 21,4% of iron-ore output from Kumba Iron Ore’s (Kumba) Sishen mine should be made available at cost plus 3% to support a cost effective steel manufacturing industry in the country.
The Minister added that excessive steel pricing in South Africa in the past had disadvantaged the downstream manufacturing industries. This comes at a time when government has made its mandate of job creation and increasing local production capacity clear.
South Africa’s largest steelmaker, ArcelorMittal South Africa (Mittal), had been receiving the benefit of discounted iron-ore prices for years, but had not been passing on this advantage to downstream consumers.
This bruised the relationship between the Department of Trade and Industry (DTI) and the steel company as the group's access to South African-mined iron-ore on favourable terms had been effectively secured for it by government in 2001, on the provison that the company extended a so-called "developmental" price to South African consumers.
The iron-ore arrangement and the pricing promise had been central to the unbundling deal that led to the creation of separate steel and mining companies from what had previously been the Iscor group.
But the steel group clung to its policy of pricing steel on an import parity basis, later converting to a benchmarked pricing model, which led to a breakdown of trust between the DTI and Mittal.
Last year, Mittal lost its 21,4% Sishen mining right after failing to convert its stake into a new-order mining right as required by South African law.
Kumba’s Sishen Iron Ore Company applied for the mining right, but instead, a prospecting right was granted to Imperial Crown Trading (ICT). However, Kumba has now taken the matter to court as it believed that the granting of ICT’s prospecting licence was unlawful.
Nevertheless, Davies said that whoever took hold of South African resources in the future, had to take on the responsibility of looking after the country’s economical interests.
Edited by: Mariaan Webb Tags :Sishen's mining rights, South African law,
The ugly dispute over the mining rights at Sishen Iron Ore Mine has heightened investor fears
Thursday, 24 Feb 2011Case study:Kumba and ArcelorMittal SA
By Charlotte Mathews
The ugly dispute over the mining rights at Sishen Iron Ore Mine has heightened investor fears that the awarding of permits in SA is neither fair nor transparent.
For historical reasons linked to the breakup of state-owned iron and steel company Iscor, Anglo American subsidiary Kumba Iron Ore holds 78,6% of the mining rights at Sishen. ArcelorMittal SA held the remaining 21,4% with an agreement that the steel giant would be supplied with 6,25Mt /year of iron ore from Sishen on cost plus 3%.
Iron ore has been a particularly lucrative business in the past few years as China urbanises and builds infrastructure. Kumba could increase its profits if it could export iron ore or sell it at market-related prices locally , instead of selling it to ArcelorMittal SA at a subsidised price.
So last April, when ArcelorMittal SA failed to renew its rights, Kumba, without telling its steel partner, applied for them . But unbeknown to both companies, Imperial Crown Trading (ICT), a new entity with links to President Jacob Zuma, also applied for the rights.
ICT was granted the prospecting right, a precursor to a mining right. But the awarding of the rights by the office of mineral resources minister Susan Shabangu is now at the centre of a bitter legal battle. Kumba is appealing the decision, alleging fraud in ICT’s application. This week Kumba and Shabangu’s department had filed affidavits, but ICT’s is still outstanding.
In a blatant attempt to regain the mining right by other means , ArcelorMittal SA has offered to buy out ICT for R800m and include the ICT shareholders and Zuma’s son, Duduzane — linked to the Gupta family and businessman Lazarus Zim — as its empowerment partners. The deal has not yet been finalised and the legal case is expected to drag on for a while.
Meanwhile, Shabangu is standing by her department’s decision. “Our responsibility is to look at the application. If it’s compliant, then we are compelled to grant a licence, not on the basis of the individuals,” she has reiterated. “It has nothing to do with being politically connected.”
Tags:China, Imperial Crown Trading, ICT shareholders, President Jacob Zuma,
For historical reasons linked to the breakup of state-owned iron and steel company Iscor, Anglo American subsidiary Kumba Iron Ore holds 78,6% of the mining rights at Sishen. ArcelorMittal SA held the remaining 21,4% with an agreement that the steel giant would be supplied with 6,25Mt /year of iron ore from Sishen on cost plus 3%.
Iron ore has been a particularly lucrative business in the past few years as China urbanises and builds infrastructure. Kumba could increase its profits if it could export iron ore or sell it at market-related prices locally , instead of selling it to ArcelorMittal SA at a subsidised price.
So last April, when ArcelorMittal SA failed to renew its rights, Kumba, without telling its steel partner, applied for them . But unbeknown to both companies, Imperial Crown Trading (ICT), a new entity with links to President Jacob Zuma, also applied for the rights.
ICT was granted the prospecting right, a precursor to a mining right. But the awarding of the rights by the office of mineral resources minister Susan Shabangu is now at the centre of a bitter legal battle. Kumba is appealing the decision, alleging fraud in ICT’s application. This week Kumba and Shabangu’s department had filed affidavits, but ICT’s is still outstanding.
In a blatant attempt to regain the mining right by other means , ArcelorMittal SA has offered to buy out ICT for R800m and include the ICT shareholders and Zuma’s son, Duduzane — linked to the Gupta family and businessman Lazarus Zim — as its empowerment partners. The deal has not yet been finalised and the legal case is expected to drag on for a while.
Meanwhile, Shabangu is standing by her department’s decision. “Our responsibility is to look at the application. If it’s compliant, then we are compelled to grant a licence, not on the basis of the individuals,” she has reiterated. “It has nothing to do with being politically connected.”
Tags:China, Imperial Crown Trading, ICT shareholders, President Jacob Zuma,
Monday, February 14, 2011
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)
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)
NGOs planning legal action to force ArcelorMittal SA to publish masterplan
Monday, 14 Feb 2011
Although their relationship with ArcelorMittal South Africa had become less acrimonious, environmental groups said that they are planning legal action to force the steel producer to publish a secret 8 year old environmental masterplan.
The issue has strained stakeholder relations after the masterplan was compiled by consultants in 2002 but never made public. ArcelorMittal SA said yesterday that it would not release the 9000 page report. The company published year end results and announced plans to spend ZAR 3 billion up to 2015 on environmental rehabilitation, legacy water pollution and clean energy projects. Environmental spend amounted to R300 million in the year under review.
The company said its commitment to making our operations sustainable has not wavered, despite the economic downturn. By comparison, it said in 2009 that only the most urgent of its environmental projects would proceed.
The Vaal Environmental Justice Alliance said in Vanderbijlpark that their relationship was no longer acrimonious, but legal action was nonetheless being pursued.
Vanderbijlpark is home to ArcelorMittal SA's headquarters and primary production site, which has attracted the attention of the Green Scorpions as it falls within the Vaal Triangle priority air shed area.
Mr Phineas Malapela chairman of Vaal Environmental Justice Alliance said that environmental NGOs and Department of Water Affairs officials were part of a monitoring committee to keep watch on issues such as the proximity to water sources of toxic sludge leached from an unlined waste site.
The firm said it no longer had unlined ponds at Vanderbijlpark after a new site was commissioned in December.
Mr Malapela believed the change in ArcelorMittal SA’s attitude to have come about on the instruction of parent company ArcelorMittal, which owns 52% of its JSE listed subsidiary. Global environmental groups have sustained an international campaign to highlight transgressions at ArcelorMittal operations worldwide.
Mr Bobby Peek director of NGO groundWork said that although the relationship with ArcelorMittal SA was not acrimonious. He added that "It's not of any value in the monitoring committee. You can't have a relationship of value to monitor old toxic landfill sites that is based on information you don't have."
He accused ArcelorMittal SA of using the committee to tick boxes. He added that "It's partly up to us (organizations) to unpack that, which is why we’re taking the legal process." He added that an alliance of environmental organizations was investigating the possibility of securing access to the masterplan via the Promotion of Access to Information Act.
According to Mr Malapela, ArcelorMittal SA had said that it was advised by its lawyers not to release the document.
Previously ArcelorMittal SA argued it would not make the document public because it was accepted practice that audits were confidential and the bulk of the work undertaken in the masterplan was outdated. The company said that its efforts to improve environmental performance relied heavily on the experience of and research and development within its parent company.
It would benchmark plants against best practice plants in Europe, North America and South America, and had approved detailed action plans with targets for improved efficiency and reduced energy usage.
(sourced:www.iol.co.za)
Although their relationship with ArcelorMittal South Africa had become less acrimonious, environmental groups said that they are planning legal action to force the steel producer to publish a secret 8 year old environmental masterplan.
The issue has strained stakeholder relations after the masterplan was compiled by consultants in 2002 but never made public. ArcelorMittal SA said yesterday that it would not release the 9000 page report. The company published year end results and announced plans to spend ZAR 3 billion up to 2015 on environmental rehabilitation, legacy water pollution and clean energy projects. Environmental spend amounted to R300 million in the year under review.
The company said its commitment to making our operations sustainable has not wavered, despite the economic downturn. By comparison, it said in 2009 that only the most urgent of its environmental projects would proceed.
The Vaal Environmental Justice Alliance said in Vanderbijlpark that their relationship was no longer acrimonious, but legal action was nonetheless being pursued.
Vanderbijlpark is home to ArcelorMittal SA's headquarters and primary production site, which has attracted the attention of the Green Scorpions as it falls within the Vaal Triangle priority air shed area.
Mr Phineas Malapela chairman of Vaal Environmental Justice Alliance said that environmental NGOs and Department of Water Affairs officials were part of a monitoring committee to keep watch on issues such as the proximity to water sources of toxic sludge leached from an unlined waste site.
The firm said it no longer had unlined ponds at Vanderbijlpark after a new site was commissioned in December.
Mr Malapela believed the change in ArcelorMittal SA’s attitude to have come about on the instruction of parent company ArcelorMittal, which owns 52% of its JSE listed subsidiary. Global environmental groups have sustained an international campaign to highlight transgressions at ArcelorMittal operations worldwide.
Mr Bobby Peek director of NGO groundWork said that although the relationship with ArcelorMittal SA was not acrimonious. He added that "It's not of any value in the monitoring committee. You can't have a relationship of value to monitor old toxic landfill sites that is based on information you don't have."
He accused ArcelorMittal SA of using the committee to tick boxes. He added that "It's partly up to us (organizations) to unpack that, which is why we’re taking the legal process." He added that an alliance of environmental organizations was investigating the possibility of securing access to the masterplan via the Promotion of Access to Information Act.
According to Mr Malapela, ArcelorMittal SA had said that it was advised by its lawyers not to release the document.
Previously ArcelorMittal SA argued it would not make the document public because it was accepted practice that audits were confidential and the bulk of the work undertaken in the masterplan was outdated. The company said that its efforts to improve environmental performance relied heavily on the experience of and research and development within its parent company.
It would benchmark plants against best practice plants in Europe, North America and South America, and had approved detailed action plans with targets for improved efficiency and reduced energy usage.
(sourced:www.iol.co.za)
Tuesday, February 1, 2011
Mineral Resources backs ArcelorMittal’s push for iron ore supply deal
By,Sibonelo RadebeTuesday, 01 Feb.2011The Department of Mineral Resources (DMR) seems to have thrown its weight behind ArcelorMittal SA which seeks to reinstate the 2001 iron ore supply agreement with Kumba’s Sishen mine in the Northern Cape.
This is clearly spelt out in the affidavit of DMR’s director general Sandile Nogxina who was responding to Kumba in the legal battle for a 21.4% share of Sishen mining rights.
ArcelorMittal has threatened to close down its Saldanha steel manufacturing plant if a favourable iron ore supply arrangement was not found.
Nogxina said the Sishen mineral rights were of strategic importance and thus the decision as to who received the 21.4% portion of the Sishen rights should be alive to broader public interests which far outweighed Kumba’s own parochial interests.
ArcelorMittal held a 21.4% share of Sishen’s mining rights which came with a special iron ore supply agreement from 2001.
In this agreement, ArcelorMittal was entitled to receive 6.25 million tons a year of iron ore from Sishen at cost plus 3%.
Arcelor Mittal lost the 21.4% share of Sishen’s mining rights after it failed to convert them into new order mining rights in 2009.
Kumba, which holds 78.6% of the Sishen rights, is claiming the former ArcelorMittal portion for itself. A firm styled as a black economic empowerment (BEE) entity, Imperial Crown Trading (ICT), successfully applied for prospecting rights over the 21.4% share of Sishen.
After ArcelorMittal failed to convert its rights, Kumba moved to rescind the supply agreement.
An interim supply agreement was put in place after the intervention of government. An arbitration process was put in place and an interim measure which was set to run between March 1 and July 31, 2010, sees ArcelorMittal pay between $50 and $70 per ton. This applies to a maximum of 520000 tons per month.
Nogxina said there were sound reasons for the splitting of the mining rights to the Sishen iron oreed in 2001. These reasons remain valid, said Nogxina. “The mere fact that ArcelorMittal has through its negligence caused its old order rights to lapse, does not in any way affect this reasoning.”
Nogxina added that in November last year, cabinet announced that government would establish an interdepartmental task team which would look into the re-establishment of an arrangement to allow ArcelorMittal and other steel producers to source the 21.4% share of Sishen at cost plus 3%.
This arrangement would be modelled in a way that produces steel prices that are in line with the cheap iron ore supply agreement. Kumba refused to enter into such an arrangement, said Nogxina.
He added that the manner in which the output of the Sishen mine was handled had a direct impact on the local steel industry.
Nogxina said Kumba’s behavior around the Sishen matter and mainly the relentless pursuit of the Sishen rights that it did not own and the suspension of the supply agreement was motivated by parochial interest.
Kumba was driven simply by the quest for profits, said Nogxina.
“I understand that and I have no difficulty with it”.
Kumba’s financial strength benefits the national fiscus, the local community and its BEE shareholders. However the minister was required to pursue a broader range of interests than those affected by Kumba’s commercial success, said Nogxina.
Kumba is expected to respond to DMR’s claims in court proceedings. But the Anglo American subsidiary has maintained that the supply arrangement with ArcelorMittal “became inoperative in its entirety as of May 1, 2009”. (sourced:thenewage.co.za)
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