Johannesburg - South African iron ore miner Kumba Iron Ore
[JSE:KIO] said on Thursday it had agreed to extend an interim supply deal with
ArcelorMittal South Africa [JSE:KACL] until the end of the year as the
companies wrangle to resolve a dispute over pricing.
Kumba, a unit of Anglo American [JSE:AGL], said it would
supply the steelmaker with a maximum of 1.5 million tonnes of ore, with
ArcelorMittal paying a fixed price of $50 per tonne for ore for its Saldanha
plant and $70 per tonne for its inland plants.
Kumba had suspended an agreement with ArcelorMittal in
February 2010 under which it had sold it iron ore at a discounted price of
production costs plus 3%.
The deal was in place because ArcelorMittal had a mining
right in Kumba’s Sishen mine which it allowed to lapse, though it insists the
discount supply agreement still stands.
The companies are still in discussions on the terms of the
supply deal after December 31 and until the finalisation of an arbitration
hearing.
ArcelorMittal has said it was confident the arbitration
would rule in its favour. The company already paid R1.1bn more for iron ore in
2011 due to the dispute.
By 08:51 GMT, Kumba was trading 2.3% higher at R565.19, while ArcelorMittal was down 0.44% at R45.
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