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 Sishen mine. Show all posts
Showing posts with label Sishen mine. Show all posts
Thursday, December 15, 2011
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)
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