Cape Town - The trade and industry department is "carefully monitoring" the impact a dispute between Kumba Iron Ore and ArcelorMittal SA (Amsa) could have on the economy.
"The department of trade and industry notes the dispute between Kumba Iron Ore and ArcelorMittal South Africa, which led to the suspension of trading in ArcelorMittal South Africa's shares on Friday 26 February," the department said in a statement on Monday.
"While this is essentially a commercial dispute between two private companies, the DTI will carefully monitor developments and assess the implications for the broader economy."
Kumba said last week it was cancelling a cost plus three percent iron-ore pricing arrangement it had with Amsa, leading to the suspension of trading in Amsa's shares on Friday.
Trade and Industry Minister Rob Davies said last week he would seek urgent meetings with Kumba, Anglo American (KIO's majority shareholder) and Amsa to discuss the "implications" on steel prices should Amsa have to begin paying "commercial rates" for its iron ore.
Kumba will reportedly earn above $100 a tonne for its ore, far higher than the estimated $25 a tonne ArcelorMittal pays.
The deal between the two companies has been in place since former steel parastatal Iscor was unbundled into two separate businesses in 2001.
"ArcelorMittal rejects Kumba's cancellation of the contract and is engaging the management of Kumba as a matter of urgency," Amsa said in a statement.
"If the matter is not resolved satisfactorily then ArcelorMittal South Africa will proceed with legal action."
- Sapa