Johannesburg - The three-way battle between
Kumba Iron Ore [JSE:KIO],
ArcelorMittal SA [JSE:ACL] and Imperial Crown Trading over the mining rights of the Sishen iron ore mine in the Northern Cape is gaining momentum as legal processes get under way.
The legal teams of Kumba - the iron ore subsidiary of Anglo American [JSE:AGL] - and Imperial Crown Trading will soon be meeting to discuss the latter's demand for access to the Sishen mine, as it has become clear that a reappraisal of government's decision to award ITC prospecting rights will take several months.
ITC is insisting on access to the mine because legislation prescribes time limitations on prospecting rights and the newcomer wants to use the rights as soon as possible. It could lose the rights if too much time elapses before it can start prospecting, said Jagdish Parekh, the company's controlling shareholder.
Kumba and ITC are engaged in a fierce but extremely sensitive wrangle over mineral rights over Sishen – one the world's biggest and most valuable iron-ore mines.
ITC surreptitiously applied to the department of minerals for 21.4% of Sishen's mineral rights after former owner ArcelorMittal SA had neglected to renew its rights.
A key issue in the dispute is how ITC discovered that ArcelorMittal's mineral rights had lapsed on April 30 last year, enabling it to apply.
Parekh told Sake24.com that Advocate Phemelo Sehunelo from the Northern Cape bar was the founder of ITC, and had been involved first in acquiring the mineral rights.
He said he – Parekh – became involved in March.
Sehunelo, who is also acting CEO of Kimberley Consolidated Mining [JSE:KCM], said all one had to do was to keep an eye on Kumba and ArcelorMittal's annual reports. He had noted from public documents that the rights had expired, he said.
When Sake24 pointed out to Sehunalo there had been no mention of the lapsed mineral rights in either Kumba or ArcelorMittal's annual reports, Parekh reacted aggressively.
Applicants were not required to reveal where they got their information, he maintained.
In the second phase of the dispute ArcelorMittal and Kumba eventually managed to appoint arbitrators for the legal spat in which Kumba disputed ArcelorMittal's right to purchase 6.25 million tons of iron ore a year from Sishen at cost price plus 3%.
This right was attached to ArcelorMittal's former mineral rights over the Sishen mine.
Kumba and ArcelorMittal have each appointed a mediator for the hearing, but they still have to agree on a third, independent one, said a Kumba spokesperson.
The outcome of the dispute is critical to ArcelorMittal's continued survival - the right to get the iron ore at cost price means a saving of some R4bn a year, depending on the market price for the commodity.
- Sake24.com