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JSE probes ArcelorMittal conduct

Mar 09 2010 07:21 Jan de Lange

Company Data

Kumba [JSE : KIO]

Last traded R562.15
Change R0.38
% Change 0.07%
Cumulative volume 464,064
Market cap R181.05bn

Last Updated: 13/02/2012 at 17:42. Prices are delayed by 15 minutes. Source: McGregor BFA

 

Jse [JSE : JSE]

Last traded R79.00
Change R1.30
% Change 1.67%
Cumulative volume 213,212
Market cap R6.86bn

Last Updated: 13/02/2012 at 17:42. Prices are delayed by 15 minutes. Source: McGregor BFA

 

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Johannesburg - The JSE [JSE:JBL] has been questioning ArcelorMittal to determine why for three weeks the steel giant kept secret a letter informing it that it would no longer receive most of its iron ore at cost price.

At the same time, iron ore prices are rapidly rising on global markets and more than $140/to is being paid in deals where Chinese steel manufacturers are buying ore from India.

This means that Mittal could pay five or six times more for most of its iron ore unless it reaches a settlement with Kumba in the dispute referred to arbitration last week.

According to Kumba , Mittal was informed on February 5 that Sishen Iron Ore, the company managing the Sishen mine, which is controlled by Kumba, would no longer supply 6.25 million tonnes of iron ore a year to Mittal at cost-plus-3%, which in dollar terms is about $25 a tonne.

Mittal informed the JSE only three weeks later, on February 26, and an immediate decision was taken to suspend trading in the steelmaker's shares.

That had certainly not been an insignificant letter, said JSE CEO Russell Loubser on Monday.

The suspension was lifted last Wednesday and Mittal's share price plummeted about 24%.

Loubser told Sake24.com that the JSE had examined a variety of aspects. Enquiries are continuing.

On the other side of the globe in Hong Kong, temperatures are rising in negotiations between Chinese steel producers and the world's biggest iron ore suppliers - negotiations that have suddenly become vitally important to Mittal.

A month ago analysts expected a 40% increase to emerge from top-level negotiations on iron ore contract prices, but now it seems that an 80% hike could make iron ore still look cheap - such has been the increase in demand.

The prevailing contract price is $61/tonne, but spot prices have recently risen to $134/tonne, while transactions for Indian iron ore to China are sometimes concluded at more than $140/tonne.

Over the weekend, the Chinese came to an agreement with BHP Billiton on provisional contract prices retrospective to January.

The Chinese will pay a provisional price backdated to January when a final agreement is reached, Gu Jian Guo, the chairperson of Maanshan Steel, told Bloomberg in Beijing on Monday.

- Sake24.com

For more business news in Afrikaans, go to Sake24.com.

 
 
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