ArcelorMittal South Africa Ltd. (ACL.JO) said that as a result of Kumba Iron Ore Ltd.'s (KIO.JO) decision to cut iron ore supplies to the steelmaker until it accepts an interim pricing arrangement, it will be forced to close a plant and reduce exports and domestic production, ArcelorMittal said Friday.

"I'm profoundly disturbed with Kumba's decision as it will have a wider impact on the economy of this country, and will result in definite job losses in our business and the downstream industries," ArcelorMittal South Africa's chief executive officer Nonkululeko Nyembezi-Heita said.

"At this stage, I am expecting that about 3,000 to 4,000 jobs will be affected," he added.

A subsidiary of the world's largest steelmaker ArcelorMittal (MT), the South African unit has been locked in a dispute with Kumba, which is 63% owned by Anglo American PLC (AAL.LN), over a contract in which Kumba supplied a set amount of iron ore to ArcelorMittal at a price of 3% above cost of production.

Friday, Kumba said it would no longer supply ArcelorMittal with iron ore, after it rejected two interim pricing options, unless the steelmaker paid in advance and at prices closer to the market rate.

Following ArcelorMittal's loss of rights to part of the Sishen mine--jointly owned with Kumba--due to a missed government deadline for renewing it earlier in the year, Kumba said that it wanted to break from the contract set in 2001 and sell at market prices.

-By Devon Maylie, Dow Jones Newswires; +44 (0)20 7842 9483; devon.maylie@dowjones.com
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