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 Kumba Iron Ore Ltd. Show all posts
Showing posts with label Kumba Iron Ore Ltd. Show all posts
Thursday, December 15, 2011
Friday, December 2, 2011
From rags to riches at South Africa iron ore mine
Fri Dec 2, 2011
KATHU, South Africa Dec 2 (Reuters) - Life is about to get a lot better for people like Christopher Mocwane, a worker at one of the world's largest iron ore mines outside this dusty town in the middle of the Kalahari desert.
Thanks to an employee share ownership scheme, the 47-year-old, who earns 7,000 rand ($835) a month, is about to receive a 576,045-rand ($68,700) windfall.
"I'm going to buy myself a house. The one where I live now, I'll fix it and give it to my mother," he told Reuters, wiping the sweat off his forehead in the scorching heat. "She was very happy when I told her."
"My children are still small, but I will now be able to send them to school when they grow up," he added with a nervous smile.
Mocwane is one of 6,200 workers at Kumba Iron Ore due to benefit from the plan aimed at ensuring all its workers share the profits of the iron ore producer over the past five years.
A unit of global miner Anglo American, Kumba has already paid out 279 million rand in dividends to the same employees, an average of 55,000 rand per person over five years.
The lump sum to be paid out between Dec. 15 and 17 is linked to the share price on Nov. 17, and comes to around 345,000 rand per employee after taxes. Those who have not been with Kumba for the full five years will get less.
"I've tried to fix my house. We had a problem with water, and now we have water," said Mocwane, who has worked at the open-pit mine for 17 years, first as a cleaner and now driving trucks.
"For many years I didn't have a car, but I have one now. I can see a lot of difference in my life," he said.
A SUCCESS FOR EMPOWERMENT SCHEME
Kumba's "Envision" programme has become a poster child for South Africa's much-maligned Black Economic Empowerment scheme aimed at giving blacks a stake in the economy after apartheid was dismantled in 1994.
Under the scheme, companies are required to meet quotas on black ownership, employment and procurement. Many have invested millions to build houses, hospitals and schools, but unions say Kumba's solution is unique.
"Every benefit the company is earning, (the workers) are part of it ... and it's not just a one-off," said Tebogo Chakapedi, a shopsteward at the National Union of Mineworkers.
"We would like that at a national level all companies adapt this," Chakapedi added.
Kumba's scheme was established when the iron ore assets of then Kumba Resources were unbundled in the Sishen Iron Ore Company (SIOC) in 2006.
Luckily for the employees, the company's share price has since soared thanks to rising prices of iron ore -- a core ingredient in steel -- from 120 rand in 2006 when the scheme was launched to 502 rand on Friday.
Many empowerment schemes have been criticised as only benefiting a small and politically-connected elite in a country where millions of black South Africans still live in poverty and more than a quarter of the workforce is jobless.
Critics, including some in South Africa's ruling African National Congress calling for the nationalisation of mines, also contend that mining houses have done little for the communities that sit atop the minerals.
This has sparked a drive by unions and the government to push for more broad-based deals like Kumba's.
GOOD BUSINESS SENSE
Kumba chief executive Chris Griffith said Envision made business sense as well.
"We haven't had a strike in years. Employees are thinking all the time about how to continue to deliver what we are expected to deliver ... that also brings a lot of comfort for investors," he said.
Kumba today boasts one of the lowest staff turnover rates in the industry at around 3 percent and has launched another 5-year scheme bringing more dividends and another lump sum in 2016 as an incentive to stay on instead of cashing in and leaving.
Aware of the potential negative effects of sudden windfalls, the company has organised workshops, industrial theatre performances and distributed comics over the past year to teach workers about how to pay off debt and invest in housing.
They were also taught how to pay taxes -- a new experience for some given their incomes range between 5,000 and 20,000 rand a month, excluding benefits.
The arid Northern Cape province all around Kathu is sparsely populated and impoverished, a sprawling rural area where carts are still drawn by donkeys.
But there is lots of building activity in Kathu and new businesses like hair salons and car washes are springing up, partially supported through programmes organised by Kumba.
In a country with one of the world's highest crime rates, there are concerns that the next pay day will be a magnet for criminals. Kumba said it was working with the local police to make sure people would not be targeted by thieves.
"I'm afraid (you) will see people knocking on your door saying 'oh, I'm selling this...', maybe coming to rob us," said Patricia Andries, a health and safety officer at the mine.
For now workers are just counting the days.
"It's like a kid waiting for Christmas ... my wife can't wait," said Ian van den Heever, a boiler maker at the mine.
(sourced Reuters)
KATHU, South Africa Dec 2 (Reuters) - Life is about to get a lot better for people like Christopher Mocwane, a worker at one of the world's largest iron ore mines outside this dusty town in the middle of the Kalahari desert.
Thanks to an employee share ownership scheme, the 47-year-old, who earns 7,000 rand ($835) a month, is about to receive a 576,045-rand ($68,700) windfall.
"I'm going to buy myself a house. The one where I live now, I'll fix it and give it to my mother," he told Reuters, wiping the sweat off his forehead in the scorching heat. "She was very happy when I told her."
"My children are still small, but I will now be able to send them to school when they grow up," he added with a nervous smile.
Mocwane is one of 6,200 workers at Kumba Iron Ore due to benefit from the plan aimed at ensuring all its workers share the profits of the iron ore producer over the past five years.
A unit of global miner Anglo American, Kumba has already paid out 279 million rand in dividends to the same employees, an average of 55,000 rand per person over five years.
The lump sum to be paid out between Dec. 15 and 17 is linked to the share price on Nov. 17, and comes to around 345,000 rand per employee after taxes. Those who have not been with Kumba for the full five years will get less.
"I've tried to fix my house. We had a problem with water, and now we have water," said Mocwane, who has worked at the open-pit mine for 17 years, first as a cleaner and now driving trucks.
"For many years I didn't have a car, but I have one now. I can see a lot of difference in my life," he said.
A SUCCESS FOR EMPOWERMENT SCHEME
Kumba's "Envision" programme has become a poster child for South Africa's much-maligned Black Economic Empowerment scheme aimed at giving blacks a stake in the economy after apartheid was dismantled in 1994.
Under the scheme, companies are required to meet quotas on black ownership, employment and procurement. Many have invested millions to build houses, hospitals and schools, but unions say Kumba's solution is unique.
"Every benefit the company is earning, (the workers) are part of it ... and it's not just a one-off," said Tebogo Chakapedi, a shopsteward at the National Union of Mineworkers.
"We would like that at a national level all companies adapt this," Chakapedi added.
Kumba's scheme was established when the iron ore assets of then Kumba Resources were unbundled in the Sishen Iron Ore Company (SIOC) in 2006.
Luckily for the employees, the company's share price has since soared thanks to rising prices of iron ore -- a core ingredient in steel -- from 120 rand in 2006 when the scheme was launched to 502 rand on Friday.
Many empowerment schemes have been criticised as only benefiting a small and politically-connected elite in a country where millions of black South Africans still live in poverty and more than a quarter of the workforce is jobless.
Critics, including some in South Africa's ruling African National Congress calling for the nationalisation of mines, also contend that mining houses have done little for the communities that sit atop the minerals.
This has sparked a drive by unions and the government to push for more broad-based deals like Kumba's.
GOOD BUSINESS SENSE
Kumba chief executive Chris Griffith said Envision made business sense as well.
"We haven't had a strike in years. Employees are thinking all the time about how to continue to deliver what we are expected to deliver ... that also brings a lot of comfort for investors," he said.
Kumba today boasts one of the lowest staff turnover rates in the industry at around 3 percent and has launched another 5-year scheme bringing more dividends and another lump sum in 2016 as an incentive to stay on instead of cashing in and leaving.
Aware of the potential negative effects of sudden windfalls, the company has organised workshops, industrial theatre performances and distributed comics over the past year to teach workers about how to pay off debt and invest in housing.
They were also taught how to pay taxes -- a new experience for some given their incomes range between 5,000 and 20,000 rand a month, excluding benefits.
The arid Northern Cape province all around Kathu is sparsely populated and impoverished, a sprawling rural area where carts are still drawn by donkeys.
But there is lots of building activity in Kathu and new businesses like hair salons and car washes are springing up, partially supported through programmes organised by Kumba.
In a country with one of the world's highest crime rates, there are concerns that the next pay day will be a magnet for criminals. Kumba said it was working with the local police to make sure people would not be targeted by thieves.
"I'm afraid (you) will see people knocking on your door saying 'oh, I'm selling this...', maybe coming to rob us," said Patricia Andries, a health and safety officer at the mine.
For now workers are just counting the days.
"It's like a kid waiting for Christmas ... my wife can't wait," said Ian van den Heever, a boiler maker at the mine.
(sourced Reuters)
Friday, November 4, 2011
Kumba workers to get ZAR 500 000 each
Friday, 04 Nov 2011 | By MoneyWeb.co.za
Kumba Iron Ore announced that its shareholders had approved the general terms and conditions necessary to implement phase one of its broad based employee share participation scheme known as Envision.
The offering is seen as the most generous in the history of SA mining with employees from the lowest skill levels expecting to take home what may amount to R500 000 for five years of service.
This is in addition to the basic salaries earned by employees and an average of ZAR 55 000 in dividends thus far payed out by the scheme to individual participants.
According to Vusani Malie company secretary, employees will be paid out the capital appreciation linked to Envision’s 3% holding of Sishen Iron Ore Company, Kumba’s major subsidiary, accumulated over the five years since the scheme was implemented
The actual value of the payout will be calculated based on the five day volume weighted average price of Kumba’s shares up to November 17, said Malie, with the final payout being made on December 15.
All employees below managerial level will stand to benefit an equal amount on a pro-rata basis calculated according to the total period over which they had been employed during the life of the first phase of the scheme.
Malie said that the scheme will pay out a total ZAR 2.5 billion or ZAR 500 000 for an employee who has been employed by Sishen for the full five year period.
More than 5 800 employees stand to benefit from the scheme.
Kumba Iron Ore announced that its shareholders had approved the general terms and conditions necessary to implement phase one of its broad based employee share participation scheme known as Envision.
The offering is seen as the most generous in the history of SA mining with employees from the lowest skill levels expecting to take home what may amount to R500 000 for five years of service.
This is in addition to the basic salaries earned by employees and an average of ZAR 55 000 in dividends thus far payed out by the scheme to individual participants.
According to Vusani Malie company secretary, employees will be paid out the capital appreciation linked to Envision’s 3% holding of Sishen Iron Ore Company, Kumba’s major subsidiary, accumulated over the five years since the scheme was implemented
The actual value of the payout will be calculated based on the five day volume weighted average price of Kumba’s shares up to November 17, said Malie, with the final payout being made on December 15.
All employees below managerial level will stand to benefit an equal amount on a pro-rata basis calculated according to the total period over which they had been employed during the life of the first phase of the scheme.
Malie said that the scheme will pay out a total ZAR 2.5 billion or ZAR 500 000 for an employee who has been employed by Sishen for the full five year period.
More than 5 800 employees stand to benefit from the scheme.
Saturday, October 22, 2011
Miners lead S.African stocks higher
Oct22, 2011
By Tiisetso Motsoeneng
JOHANNESBURG (Reuters) - South African stocks ended sharply higher on Friday, booking their third straight day of gains, with miners among the top performers as commodity prices cruised higher.
Bourse heavyweight BHP Billiton jumped 4.26 percent to 245 rand, Kumba Iron Ore added 3.66 percent to 457.13 rand and Assore improved 2.99 percent to 208.1 rand.
Optimism that euro zone politicians will come up with a comprehensive plan to resolve the region's two-year debt crisis added to the overall bullish sentiment.
The JSE Top-40 blue-chip index was 2.25 percent better at 28,165.61, while the broader All-share index added 1.99 percent to 31,449.99.
"We believe investors may be drawn back to markets on the back of renewed hopes for a solution to the euro zone crisis," said Kavita Patel, a trader at Sasfin Securities.
Others gainers included luxury goods group Richemont, which added 3.88 percent to 43.93 rand. "We believe this stock will continue to do well as an increasing portion of its sales are derived from emerging markets," Patel said.
On the downside, Vodacom lost 1.03 percent to 86.60 rand after its joint venture partner in the Democratic Republic of Congo filed a lawsuit to block the mobile phone operator from selling its majority stake in the unit.
Murray & Roberts was off 0.49 percent to 24.50 rand after the construction firm released a downbeat trading update, saying trading conditions remained weak at home and in the Middle East.
(source Reuters)
By Tiisetso Motsoeneng
JOHANNESBURG (Reuters) - South African stocks ended sharply higher on Friday, booking their third straight day of gains, with miners among the top performers as commodity prices cruised higher.
Bourse heavyweight BHP Billiton jumped 4.26 percent to 245 rand, Kumba Iron Ore added 3.66 percent to 457.13 rand and Assore improved 2.99 percent to 208.1 rand.
Optimism that euro zone politicians will come up with a comprehensive plan to resolve the region's two-year debt crisis added to the overall bullish sentiment.
The JSE Top-40 blue-chip index was 2.25 percent better at 28,165.61, while the broader All-share index added 1.99 percent to 31,449.99.
"We believe investors may be drawn back to markets on the back of renewed hopes for a solution to the euro zone crisis," said Kavita Patel, a trader at Sasfin Securities.
Others gainers included luxury goods group Richemont, which added 3.88 percent to 43.93 rand. "We believe this stock will continue to do well as an increasing portion of its sales are derived from emerging markets," Patel said.
On the downside, Vodacom lost 1.03 percent to 86.60 rand after its joint venture partner in the Democratic Republic of Congo filed a lawsuit to block the mobile phone operator from selling its majority stake in the unit.
Murray & Roberts was off 0.49 percent to 24.50 rand after the construction firm released a downbeat trading update, saying trading conditions remained weak at home and in the Middle East.
(source Reuters)
Tuesday, October 4, 2011
Kumba Iron employees share ownership plan
Tue, Oct04, 2011
Kumba Iron Ore employee share ownership plan which will generate about ZAR 1 billion for the taxman will not be available to an estimated 1000 contractors employed by the mining group.
Mr Vusani Malie Kumba company secretary said that legally it was not possible to include non permanent members of the workforce in the scheme. He said that this situation was regrettable and that in general Kumba tried to compensate contract staff for any disparity in earnings.
The exclusion of contractors from Esops which are set to become increasingly important aspects of black economic empowerment schemes is expected to add to political pressure around the use of labour brokers.
The spokesman for the National Union of Mineworkers Mr Lesiba Seshoka acknowledged that contractors would not benefit from the Kumba Esop and noted “This is why we are opposed to the use of labour brokers, they are eroding the benefits that have been earned by the workforce.”
He described the scheme as possibly the best such initiative in place in the country. He said that “We are very excited about the outcome of this scheme and believe it should be the model that is adopted by all mining companies.”
Mr Seshoka acknowledged that the current weakness in the share market could see the payout falling below the estimated ZAR 500 000 pretax cash expected to be paid out to each Kumba employee with five years service. He said that “Share prices rise and fall, that is how the market works and you can’t control the market.”
In terms of the Kumba scheme a cash payout of about ZARL 2.5 billion is expected to be made to Kumba employees in early December. The 6 014 members of the scheme are full time employees below management level.
NUM and trade union Solidarity have both commended Kumba management for engaging extensively with union representatives in the design of the Esop.
(sourced from IOL)
Kumba Iron Ore employee share ownership plan which will generate about ZAR 1 billion for the taxman will not be available to an estimated 1000 contractors employed by the mining group.
Mr Vusani Malie Kumba company secretary said that legally it was not possible to include non permanent members of the workforce in the scheme. He said that this situation was regrettable and that in general Kumba tried to compensate contract staff for any disparity in earnings.
The exclusion of contractors from Esops which are set to become increasingly important aspects of black economic empowerment schemes is expected to add to political pressure around the use of labour brokers.
The spokesman for the National Union of Mineworkers Mr Lesiba Seshoka acknowledged that contractors would not benefit from the Kumba Esop and noted “This is why we are opposed to the use of labour brokers, they are eroding the benefits that have been earned by the workforce.”
He described the scheme as possibly the best such initiative in place in the country. He said that “We are very excited about the outcome of this scheme and believe it should be the model that is adopted by all mining companies.”
Mr Seshoka acknowledged that the current weakness in the share market could see the payout falling below the estimated ZAR 500 000 pretax cash expected to be paid out to each Kumba employee with five years service. He said that “Share prices rise and fall, that is how the market works and you can’t control the market.”
In terms of the Kumba scheme a cash payout of about ZARL 2.5 billion is expected to be made to Kumba employees in early December. The 6 014 members of the scheme are full time employees below management level.
NUM and trade union Solidarity have both commended Kumba management for engaging extensively with union representatives in the design of the Esop.
(sourced from IOL)
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."
Monday, August 15, 2011
Q&A-The ArcelorMittal SAfrica, Kumba mine rights dispute
Aug14,2011 | By Thomson Reuters
By Agnieszka Flak
JOHANNESBURG, Aug 15 (Reuters) - A South African court will this week hear a case over disputed mineral rights that is at the bottom of a spat worth billions of rand and which could shed light on allegations of perceived fraud and corruption in government ranks.
WHAT IS THE DISPUTE ABOUT?
Kumba Iron Ore , a unit of global miner Anglo American , is challenging the government's award of a prospecting right over 21.4 percent in its Sishen mine to little-known Imperial Crown Trading (ICT).
Kumba had applied for a mining right over that same stake after ArcelorMittal South Africa , which used to hold the right, failed to renew it as required by law.
WHAT ARE THE DIFFERENT SIDES SAYING?
* Kumba argues that the ICT application was "fraudulent and the product of a corrupt process". The iron ore producer said ICT had copied parts of its own application and that the ICT's bid was "irregular and incomplete". It challenges the government's decision to accept the application and later grant the prospecting right. The firm also argues that the government had no right to award a prospecting right over a property where iron ore had been mined for decades.
* The government dismissed Kumba's allegations regarding its handling of the ICT bid. It further said Kumba, which also applied for ArcelorMittal's lapsed right, had manipulated the
system to gain advantage over any other applicant and was therefore disqualified. The ministry said it had given ICT's bid precedence as it was considered a historically disadvantaged
entity, although politically-linked figures are part of the ICT's board.
* ICT said that the documents Kumba had alleged were copied from its own application were planted in its bid by Kumba itself in a move to frame ICT.
* ArcelorMittal argues that its own right never lapsed. The steelmaker said that the mining act does not allow for the conversion of a proportion of a right and therefore Kumba had converted the ArcelorMittal's 21.4 percent right when it converted the 78.6 percent it owns.
WHY DOES IT MATTER?
* The preferential iron ore supply deal is worth billions of rand a year and its loss could have serious implications for ArcelorMittal, which is already struggling with rising costs.
ArcelorMittal has said that if it fails to regain the preferential supply deal it would shut its Saldanha plant and cut all steel exports, which in turn could affect some 4,000 temporary and permanent jobs and seriously affect other industries which depend on steel supply.
* The case may expose manipulation and fraud in the minerals ministry and may further unsettle investors worried about mismanagement and lack of leadership in the sector. Mining
Minister Susan Shabangu last year said that bribery, deception and intimidation were ripe in the industry and vowed to clean up the sector. She launched a mineral rights online application
system to eliminate "the perception of corruption" within her department and also plans a shake-up of the mining act to correct some "irregularities".
* The case threw the spotlight on a related contentious black economic empowerment deal involving ArcelorMittal, President Jacob Zuma's son and businessmen close to the president. Foreign investors and many South Africans have grown increasingly worried about the implementation of the black economic empowerment policy introduced in Africa's biggest
economy after apartheid ended in 1994. BEE is aimed at righting the economic wrongs of apartheid but critics have said it only enriched some businessmen in a country where millions of black South Africans still live in poverty and over a quarter of the work force is jobless.
WHO IS BEHIND ICT AND A RELATED BEE DEAL?
* ICT is a little-known company with no experience in mining. Shareholders in the company include Jagdish Parekh, a key executive in businesses owned by the Gupta family, which is
close to South African President Jacob Zuma. Several local newspapers have reported that shareholder Prudence Mtshali is close to Deputy President Kgalema Motlanthe.
* ArcelorMittal said last year it would buy ICT for 800 million rand ($111 million) to put the preferential pricing deal back in place. As part of the deal, the steelmaker said it would transfer 26 percent of its shares to a group of black investors -- including an investment group led by Zuma's son Duduzane-- and employees.
WHAT ARE POSSIBLE OUTCOMES?
* ICT is allowed to keep the prospecting right and may eventually be granted a mining right: ArcelorMittal will follow through with its plan to buy the little-known company and regain
the preferential iron ore supply deal.
* ICT loses its prospecting right: ArcelorMittal will drop its plan to buy ICT and fight Kumba over the lapsed right. The case is expected to go for arbitration in May next year. Should the judge support or dismiss ArcelorMittal's argument in the ICT case, it may either considerably strengthen or weaken the steelmaker's bid to regain the supply deal. ICT could appeal the
court's decision and the court case could drag until well after the arbitration hearing starts.
($1=7.218 South African Rand)
By Agnieszka Flak
JOHANNESBURG, Aug 15 (Reuters) - A South African court will this week hear a case over disputed mineral rights that is at the bottom of a spat worth billions of rand and which could shed light on allegations of perceived fraud and corruption in government ranks.
WHAT IS THE DISPUTE ABOUT?
Kumba Iron Ore , a unit of global miner Anglo American , is challenging the government's award of a prospecting right over 21.4 percent in its Sishen mine to little-known Imperial Crown Trading (ICT).
Kumba had applied for a mining right over that same stake after ArcelorMittal South Africa , which used to hold the right, failed to renew it as required by law.
WHAT ARE THE DIFFERENT SIDES SAYING?
* Kumba argues that the ICT application was "fraudulent and the product of a corrupt process". The iron ore producer said ICT had copied parts of its own application and that the ICT's bid was "irregular and incomplete". It challenges the government's decision to accept the application and later grant the prospecting right. The firm also argues that the government had no right to award a prospecting right over a property where iron ore had been mined for decades.
* The government dismissed Kumba's allegations regarding its handling of the ICT bid. It further said Kumba, which also applied for ArcelorMittal's lapsed right, had manipulated the
system to gain advantage over any other applicant and was therefore disqualified. The ministry said it had given ICT's bid precedence as it was considered a historically disadvantaged
entity, although politically-linked figures are part of the ICT's board.
* ICT said that the documents Kumba had alleged were copied from its own application were planted in its bid by Kumba itself in a move to frame ICT.
* ArcelorMittal argues that its own right never lapsed. The steelmaker said that the mining act does not allow for the conversion of a proportion of a right and therefore Kumba had converted the ArcelorMittal's 21.4 percent right when it converted the 78.6 percent it owns.
WHY DOES IT MATTER?
* The preferential iron ore supply deal is worth billions of rand a year and its loss could have serious implications for ArcelorMittal, which is already struggling with rising costs.
ArcelorMittal has said that if it fails to regain the preferential supply deal it would shut its Saldanha plant and cut all steel exports, which in turn could affect some 4,000 temporary and permanent jobs and seriously affect other industries which depend on steel supply.
* The case may expose manipulation and fraud in the minerals ministry and may further unsettle investors worried about mismanagement and lack of leadership in the sector. Mining
Minister Susan Shabangu last year said that bribery, deception and intimidation were ripe in the industry and vowed to clean up the sector. She launched a mineral rights online application
system to eliminate "the perception of corruption" within her department and also plans a shake-up of the mining act to correct some "irregularities".
* The case threw the spotlight on a related contentious black economic empowerment deal involving ArcelorMittal, President Jacob Zuma's son and businessmen close to the president. Foreign investors and many South Africans have grown increasingly worried about the implementation of the black economic empowerment policy introduced in Africa's biggest
economy after apartheid ended in 1994. BEE is aimed at righting the economic wrongs of apartheid but critics have said it only enriched some businessmen in a country where millions of black South Africans still live in poverty and over a quarter of the work force is jobless.
WHO IS BEHIND ICT AND A RELATED BEE DEAL?
* ICT is a little-known company with no experience in mining. Shareholders in the company include Jagdish Parekh, a key executive in businesses owned by the Gupta family, which is
close to South African President Jacob Zuma. Several local newspapers have reported that shareholder Prudence Mtshali is close to Deputy President Kgalema Motlanthe.
* ArcelorMittal said last year it would buy ICT for 800 million rand ($111 million) to put the preferential pricing deal back in place. As part of the deal, the steelmaker said it would transfer 26 percent of its shares to a group of black investors -- including an investment group led by Zuma's son Duduzane-- and employees.
WHAT ARE POSSIBLE OUTCOMES?
* ICT is allowed to keep the prospecting right and may eventually be granted a mining right: ArcelorMittal will follow through with its plan to buy the little-known company and regain
the preferential iron ore supply deal.
* ICT loses its prospecting right: ArcelorMittal will drop its plan to buy ICT and fight Kumba over the lapsed right. The case is expected to go for arbitration in May next year. Should the judge support or dismiss ArcelorMittal's argument in the ICT case, it may either considerably strengthen or weaken the steelmaker's bid to regain the supply deal. ICT could appeal the
court's decision and the court case could drag until well after the arbitration hearing starts.
($1=7.218 South African Rand)
Thursday, July 7, 2011
Kumba sees rise in H1 earnings on higher prices
Thu Jul 7,2011
* Sees headline EPS between 26.80-28.70 rand
* Says higher iron ore exports prices lift earnings
JOHANNESBURG, July 7 (Reuters) - Kumba Iron Ore (KIOJ.J: Quote) said on Thursday it expects a rise in first-half earnings lifted by higher iron ore export prices.
Kumba, the world's 10th-largest iron ore producer and a unit of Anglo American (AAL.L: Quote), said it expects headline earnings per share for the six months to end-June at between 26.80 rand and 28.70 rand.
This compares with headline earnings per share of 20.28 rand reported a year earlier.
Headline earnings are the main profit gauge in South Africa and strip certain one-off and non-trading items.
"The increase in earnings is primarily attributable to higher export iron ore prices which were partially offset by the strengthening of the average exchange rate of the rand to the U.S dollar during the period," the company said in a statement.
The local currency has gained 13 percent against the dollar over the past 12 months.
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.
Wednesday, March 23, 2011
Anglo American is Seeking to Purchase Iron-Ore Assets as Prices Increase
Mar23, 2011 4:17 PM GMT+0530
By Rebecca Keenan & Jason Scott
Anglo American Plc (AAL), a diversified mining company, is seeking to acquire iron ore assets as the price of the steelmaking raw material rises.
“We like iron ore and are determined to grow our iron ore business,” James Harman, head of business development for Anglo’s iron ore and coal unit, said today at a conference in Perth, Australia. “We remain on the lookout for quality iron ore opportunities globally, including Australia.”
The London-based company joins Rio Tinto Group in studying acquisitions to boost commodity production. Anglo, which is spending about $17 billion to expand capacity, is seeking to increase its annual iron ore output to 80 million metric tons by 2014 and 150 million tons by 2020, Harman said.
“We’re in a strong financial position, which will drive this growth,” he said.
Annual profit more than doubled last year to $6.5 billion after commodity prices rallied. Anglo is extending its Kumba Iron Ore unit’s operations in South Africa and building the Minas Rio iron ore mine in Brazil as demand from Asian steel mills climbs. Anglo owns 65.3 percent of Kumba, the world’s fourth-largest supplier of seaborne iron ore. (sourced bloomberg)
Tags : South African iron ore, Minas Rio, Asian steel mills, seaborne iron ore
If you believe an article violates your rights or the rights of others, please contact us.
By Rebecca Keenan & Jason Scott
Anglo American Plc (AAL), a diversified mining company, is seeking to acquire iron ore assets as the price of the steelmaking raw material rises.
“We like iron ore and are determined to grow our iron ore business,” James Harman, head of business development for Anglo’s iron ore and coal unit, said today at a conference in Perth, Australia. “We remain on the lookout for quality iron ore opportunities globally, including Australia.”
The London-based company joins Rio Tinto Group in studying acquisitions to boost commodity production. Anglo, which is spending about $17 billion to expand capacity, is seeking to increase its annual iron ore output to 80 million metric tons by 2014 and 150 million tons by 2020, Harman said.
“We’re in a strong financial position, which will drive this growth,” he said.
Annual profit more than doubled last year to $6.5 billion after commodity prices rallied. Anglo is extending its Kumba Iron Ore unit’s operations in South Africa and building the Minas Rio iron ore mine in Brazil as demand from Asian steel mills climbs. Anglo owns 65.3 percent of Kumba, the world’s fourth-largest supplier of seaborne iron ore. (sourced bloomberg)
Tags : South African iron ore, Minas Rio, Asian steel mills, seaborne iron ore
If you believe an article violates your rights or the rights of others, please contact us.
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,
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)
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)
Thursday, January 27, 2011
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)
* 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)
Saturday, January 15, 2011
Anglo's American's Kumba Iron Ore to Object to ICT Mine Right Application
By Carli Lourens - Jan 14, 2011
Kumba Iron Ore Ltd., a unit of Anglo American Plc, said it will object to South Africa’s acceptance of an application by Imperial Crown Trading Ltd. for a 21.4 percent mining right at its Sishen mine in South Africa.
The application was submitted on Dec. 9 and accepted on Dec. 23, Pretoria-based Kumba said in a statement today. The acceptance means the application will now be evaluated before a decision is made about granting the mining right, Kumba said.
The company, the world’s fourth-largest supplier of seaborne iron ore, is already challenging the government’s earlier award of a partial prospecting right over the mine to Imperial in the North Gauteng High Court in Pretoria. Imperial’s owners include Jagdish Parekh, who is investing in ArcelorMittal South Africa Ltd. together with South African President Jacob Zuma’s son, Duduzane.
“This means that this whole issue that we had hoped would have been put to bed already is just carrying on,” Ron Klipin, an analyst at SA Stockbrokers, said by phone from Johannesburg.
Kumba’s Sishen Iron Ore Co. “does not believe that it was lawful for the Department of Mineral Resources to have accepted ICT’s application, pending the High Court Review initiated in May 2010, over the prospecting right awarded to ICT,” it said.
Appeal the Decision
SIOC, part-owned by Exxaro Resources Ltd., is in the process of objecting to the application and will launch an appeal against the decision, Kumba said.
ArcelorMittal South Africa, controlled by the world’s largest steelmaker, previously held the partial right over Sishen mine, facilitating iron ore supplies at below-market prices. Iron ore is a steelmaking ingredient.
Kumba Chairman Lazarus Zim resigned last month to avoid a conflict of interest as he sets up a steel company to rival ArcelorMittal South Africa. Zim had earlier excluded himself from board decisions over Kumba’s Sishen deposit because of his relationship with ICT’s Parekh. Parekh’s mobile phone was switched off when Bloomberg News called seeking comment.
Zingaphi Jakuja, spokeswoman for the Department of Mineral Resources, said she couldn’t immediately comment when Bloomberg News contacted her on her mobile phone.
Kumba was unchanged at 450 rand at the 5 p.m. close in Johannesburg, giving it a market value of 145 billion rand ($21 billion).
ArcelorMittal, based in Luxembourg, is the world’s largest steelmaker.
Source: Bloomberg
Kumba Iron Ore Ltd., a unit of Anglo American Plc, said it will object to South Africa’s acceptance of an application by Imperial Crown Trading Ltd. for a 21.4 percent mining right at its Sishen mine in South Africa.
The application was submitted on Dec. 9 and accepted on Dec. 23, Pretoria-based Kumba said in a statement today. The acceptance means the application will now be evaluated before a decision is made about granting the mining right, Kumba said.
The company, the world’s fourth-largest supplier of seaborne iron ore, is already challenging the government’s earlier award of a partial prospecting right over the mine to Imperial in the North Gauteng High Court in Pretoria. Imperial’s owners include Jagdish Parekh, who is investing in ArcelorMittal South Africa Ltd. together with South African President Jacob Zuma’s son, Duduzane.
“This means that this whole issue that we had hoped would have been put to bed already is just carrying on,” Ron Klipin, an analyst at SA Stockbrokers, said by phone from Johannesburg.
Kumba’s Sishen Iron Ore Co. “does not believe that it was lawful for the Department of Mineral Resources to have accepted ICT’s application, pending the High Court Review initiated in May 2010, over the prospecting right awarded to ICT,” it said.
Appeal the Decision
SIOC, part-owned by Exxaro Resources Ltd., is in the process of objecting to the application and will launch an appeal against the decision, Kumba said.
ArcelorMittal South Africa, controlled by the world’s largest steelmaker, previously held the partial right over Sishen mine, facilitating iron ore supplies at below-market prices. Iron ore is a steelmaking ingredient.
Kumba Chairman Lazarus Zim resigned last month to avoid a conflict of interest as he sets up a steel company to rival ArcelorMittal South Africa. Zim had earlier excluded himself from board decisions over Kumba’s Sishen deposit because of his relationship with ICT’s Parekh. Parekh’s mobile phone was switched off when Bloomberg News called seeking comment.
Zingaphi Jakuja, spokeswoman for the Department of Mineral Resources, said she couldn’t immediately comment when Bloomberg News contacted her on her mobile phone.
Kumba was unchanged at 450 rand at the 5 p.m. close in Johannesburg, giving it a market value of 145 billion rand ($21 billion).
ArcelorMittal, based in Luxembourg, is the world’s largest steelmaker.
Source: Bloomberg
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