Fin24

Kumba begins argument to clear ICT debacle

2011-08-15 19:30

Johannesburg - Kumba Iron Ore [JSE:KIO], the world's fourth-startslargest iron ore producer, began its argument in the North Gauteng High Court on Monday in a bid for the reversal of a decision by the department of mineral resources (DMR) to award prospecting rights at its Sishen mine to Imperial Crown Trading (ICT).

"The hearing started this morning with ArcelorMittal SA [JSE:ACL] presenting its argument and then Kumba began presenting its argument in the afternoon - there are no findings as yet," said a spokesperson for Kumba, who did not wish to be named.

At the centre of Kumba's argument is its allegation that the ICT application was "fraudulent and the product of a corrupt process".

The DMR has brushed aside the allegations regarding its handling of the ICT bid and confirmed the awarding of the prospecting right to ICT, which is politically well-connected.

The iron ore producer, which is 64% held by Anglo American [JSE:AGL], also applied for the rights that were formerly held by ArcelorMittal SA.

ArcelorMittal in June applied to join Kumba in its battle over the right as it planned to ask the court to review or set aside a clause in Sishen Iron Ore Company's converted mining right compelling Sishen to sell its iron ore at market-related prices.

The local arm of the world's largest steelmaker has for nine years received iron ore on a cost plus three percent basis.

Court papers indicated that ArcelorMittal intended to argue that according to the country's mineral laws a prospecting or mineral right cannot be awarded over a portion of a property.

Essentially, ArcelorMittal wants a chance to prove that the 21.4% share in Sishen is not at play and that the relief sought by Sishen Iron Ore Company and Imperial Crown Trading was "misconceived in its entirety".

The spokeswoman said that the hearing had been set down for five days and would continue up to Friday.

"Kumba will continue with its argument tomorrow at 10:00," she added.

Last month the special crimes investigative unit, the Hawks, raided ICT and the DMR's offices in Kimberley as part of an investigation into possible fraudulent mining permits.

The hawks said "the operation" followed criminal charges lodged by Kumba.