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's mining rights. Show all posts
Showing posts with label Sishen's mining rights. Show all posts
Thursday, December 15, 2011
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, 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)
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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