Sishen dispute ruling expected soon

Johannesburg - A potentially precedent-setting ruling on mineral rights is expected to be handed down in mid-December.

Parties have been informed that Judge Raymond Zondo is set to give his ruling in the High Court Review related to the Sishen mineral rights case on December 15.

Not only will the ruling provide the three concerned parties with more certainty, it will clarify the court's stance on the division of mineral rights.

The case, which was brought by Kumba Iron Ore [JSE:KIO], is challenging the government's award of a prospecting right over 21.4% in its Sishen mine to little-known, politically-connected Imperial Crown Trading (ICT).

The right over only a portion of Sishen became available after ArcelorMittal SA [JSE:ACL] (Amsa), which used to hold the right, failed to convert it from an old order to a new order mining right last year.

Kumba, which is 64% owned by Anglo American [JSE:AGL], had applied for a mining right over that same stake and is now arguing that ICT's application was "fraudulent and the product of a corrupt process".

Claiming that ICT copied parts of its own application, Kumba used the lapsing of Amsa's right over the stake as an excuse to halt the cost plus 3% agreement it had in place with the steel producer for more than nine years.

The costing of iron ore - of which Amsa receives 6.25 million tonnes per year from Sishen - is currently the subject of arbitration set to be heard in April 2012.

In the meantime, Amsa in June joined Kumba as an applicant in the case against the department of mineral resources and ICT.

The local arm of the world's largest steel maker argues that its own right over the stake never lapsed. In court papers, it puts forward that since the Mineral and Petroleum Resources Development Act (MPRDA) does not allow for the conversion of a proportion of a right, Kumba would have automatically converted the Amsa right when it converted the right governing the 78.6% portion it owns.

Mineral Resources Minister Susan Shabangu has since said that the MPRDA would be amended to cater for rights splits.