Kumba turns to court over Sishen rights
Johannesburg - Kumba Iron Ore [JSE:KIO] advised its shareholders on Monday Sishen Iron Ore has initiated a review application in the North Gauteng High Court in relation to the department of mineral resources' (DMR) decision to grant a prospecting right to Imperial Crown Trading.
The department granted the prospecting right over the 21.4% interest previously held by ArcelorMittal in the Sishen Mine to Imperial Crown Trading, a little-known black economic-empowerment company, after ArcelorMittal failed to convert its interest in the mine into a new order mining right.
Sishen Iron Ore, as holder of the remaining share of the mining right, had applied for the residual 21.4% mining right previously held by ArcelorMittal but DMR decided to grant it to a third party, Kumba said in March.
At the time, Sishen Iron Ore, lodged an appeal against the granting of the prospecting right to Imperial Crown Trading and said it was engaged in discussions with the department.
"This appeal process remains ongoing," Kumba said on Monday.
It said SIOC has engaged with relevant stakeholders in relation to the grant of a prospecting right to Imperial Crown Trading and is continuing to do so.
"Shareholders are now advised that, in order to protect its interests and to avoid prescription, Sishen Iron Ore company initiated a review application in the North Gauteng High Court on May 21, 2010, in relation to the decision of the department of mineral resources to grant a prospecting right to Imperial Crown Trading," Kumba said.
Halt ArcelorMittal supplies
Meanwhile, Kumba said it may opt to halt supplies of ore to ArcelorMittal's South African unit if the two parties cannot reach an interim agreement over a supply dispute.
Kumba in February terminated the long-term deal which allowed the steelmaker to receive ore from Kumba at a discount and said it would sell to ArcelorMittal South Africa at market rates from March 1.
The unit of ArcelorMittal, the world's top steelmaker, rejected a proposal by Kumba to pay the difference between the discounted and market prices into a separate account until a resolution of the dispute.
"If they cannot come to an interim agreement, Kumba will have to review the supply arrangement ... termination of supply would be an absolute last resort, but at some stage Kumba has to start protecting its rights," a Kumba spokesperson said on Monday.
Kumba wants to charge market rates for iron ore supplies to the unit of the world's top steelmaker, but ArcelorMittal's unit has said a deal with Kumba to supply iron ore at a discount was valid and binding.
- Reuters & I-Net Bridge