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Johannesburg - Steel producer ArcelorMittal SA [JSE:ACL] is still interested in an empowerment deal after a controversial empowerment transaction with Imperial Crown Trading (ICT) fell through, according to a report on Tuesday.
ArcelorMittal SA announced last August that one of its subsidiaries would buy ICT for R800m, as long as ICT was awarded mining rights for the portion it held in the Sishen mine in the Northern Cape - one of the world's largest and richest iron ore mines.
At the time, it was also announced that ICT shareholders would be included in a black economic empowerment (BEE) deal with ArcelorMittal.
Shareholders in ICT include President Jacob Zuma's son Duduzane and Atul Gupta. The Gupta family has close links to the ANC.
On Monday, ArcelorMittal SA said the BEE deal had been cancelled.
"Shareholders are advised that the parties involved in the BEE transaction have not agreed on an extension for the satisfaction of the conditions precedent and that the subscription and shareholders' agreement has therefore lapsed," it said in a statement.
ArcelorMittal spokesperson Themba Hlengani told Bloomberg that empowerment “remains a priority for us as a company”.
He was not immediately available on Tuesday to explain further as he was in a meeting until 15:00.
Premature deal?
In February this year, on the release of the company's annual results, ArcelorMittal SA CEO Nonkululeko Nyembezi-Heita said discussions about the BEE deal with ICT may have been "premature".
Shareholders had expressed "various reservations and criticisms" about the deal, and these would be taken into account, she said.
The deal was also conditional on legal battles over its stake in the Sishen mine being resolved in ICT's favour.
The proposed transaction was announced 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 (SIOC), a subsidiary of Kumba Iron Ore [JSE:KIO] 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, which it was granted. This 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 the subject of arbitration.
ArcelorMittal SA announced last August that one of its subsidiaries would buy ICT for R800m, as long as ICT was awarded mining rights for the portion it held in the Sishen mine in the Northern Cape - one of the world's largest and richest iron ore mines.
At the time, it was also announced that ICT shareholders would be included in a black economic empowerment (BEE) deal with ArcelorMittal.
Shareholders in ICT include President Jacob Zuma's son Duduzane and Atul Gupta. The Gupta family has close links to the ANC.
On Monday, ArcelorMittal SA said the BEE deal had been cancelled.
"Shareholders are advised that the parties involved in the BEE transaction have not agreed on an extension for the satisfaction of the conditions precedent and that the subscription and shareholders' agreement has therefore lapsed," it said in a statement.
ArcelorMittal spokesperson Themba Hlengani told Bloomberg that empowerment “remains a priority for us as a company”.
He was not immediately available on Tuesday to explain further as he was in a meeting until 15:00.
Premature deal?
In February this year, on the release of the company's annual results, ArcelorMittal SA CEO Nonkululeko Nyembezi-Heita said discussions about the BEE deal with ICT may have been "premature".
Shareholders had expressed "various reservations and criticisms" about the deal, and these would be taken into account, she said.
The deal was also conditional on legal battles over its stake in the Sishen mine being resolved in ICT's favour.
The proposed transaction was announced 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 (SIOC), a subsidiary of Kumba Iron Ore [JSE:KIO] 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, which it was granted. This 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 the subject of arbitration.
