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ArcelorMittal South Africa Ltd (ACL.JO) Tuesday said it has agreed to acquire Imperial Crown Trading in a bid to reclaim rights to a 21.4% stake in the Sishen iron ore mine that it had lost.

The steel maker plans to acquire ICT through its wholly owned subsidiary OPCO, for ZAR800 million ($111 million) in cash, subject to due diligence and ICT's ability to convert prospecting rights over Sishen into mining rights, Nonkululeko Nyembezi-Heita, chief executive of ArcelorMittal South Africa said.

Kumba Iron Ore Ltd (KIO.JO), the majority owner and operator of the Sishen mine, has initiated a court review of the government's decision to award those prospecting rights to ICT instead of Kumba even though both had applied for those rights on the same day in May of last year.

ArcelorMittal South Africa, majority owned by the world's largest steel maker ArcelorMittal (MT), previously owned mineral rights to 21.4% of the Sishen mine but didn't convert them to rights that conform with new legislation, thereby creating a window of opportunity for ICT to lay claim and win prospecting rights over that portion of the Sishen mine.

"It is what it is," said Nonkululeko Nyembezi-Heita, chief executive of ArcelorMittal South Africa.

"We can't wish it away," she added, noting that the company doesn't have much of an option but to buy ICT if it wishes to reclaim its rights over the mine.

"ICT was there and not out of any choice made by ArcelorMittal," she said.

Nyembezi-Heita said the decision to purchase ICT doesn't affect the interim pricing arrangement that currently exists between the steelmaker and Kumba nor does it affect the arbitration process that is taking place over Kumba's decision to cancel a long-term supply contract with ArcelorMittal South Africa.

Kumba, a unit of Anglo American PLC (AAL.LN), in March canceled a long-running pact under which it supplied iron ore from its primary mine, Sishen, to ArcelorMittal at 3% above costs. Kumba cancelled the contract in March on grounds that the steelmaker failed to convert its old rights in the mine to new mining rights.

Nyembezi-Heita hinted that should ICT succeed in converting its prospecting right into a mining right, then ArcelorMittal would have access to more iron ore than through its long-term Sishen iron ore contract with Kumba. Under the long-term contract, ArcelorMittal has rights to 6.25 million metric tons of Sishen iron ore annually although 21.4% of Sishen's current annual production of 40 million tons would equate to about 8.56 million tons.

Sishen supplies about two-thirds of ArcelorMittal's iron ore each year.

Nyembezi-Heita said purchasing ICT simplifies the company's ability to arrive at a solution with Kumba by reducing the number of parties involved in the dispute.

"It's an attempt to restore status quo with regard to Sishen. And assuming that it does," it allows us to arrive at a long-term solution, the CEO said.

Nyembezi-Heita added that the company would not pay for ICT's legal fees as it seeks to defend its prospecting rights in court.

Kumba requested a court review in May on grounds that ICT's application had irregularities and reaffirmed Tuesday that it will continue pursue legal means for what is rightly owed to the company.

"Kumba believes that it is the only company which should be granted these rights," a Kumba spokesperson said in an emailed statement.

-By Alex MacDonald, Dow Jones Newswires; 44 20 7842 9328; alex.macdonald@dowjones.com

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