ACCRA, Ghana--Senegal has won a long-running legal dispute with
ArcelorMittal after a Paris arbitration tribunal ruled it could
rescind a $2.2 billion deal signed with the steelmaking titan in
2007, a Senegalese government spokesman said Tuesday.
An ArcelorMittal spokesman confirmed the ruling.
Senegal sought to have the deal canceled after ArcelorMittal
suspended work on a project to develop the Famele iron-ore mine in
2009.
"They simply said that the government of Senegal is freed from
its engagements as regards ArcelorMittal, who did not respect their
engagements--so there you have it," said Abdoulaye Latif Coulibaly,
spokesman of the government of Senegal.
Mr. Latif Coulibaly said the damages were still being determined
by the court, but pointed out that Senegal had been seeking up to
$750 million in relief.
ArcelorMittal "can confirm that the Tribunal has now decided
that Senegal is entitled to terminate the 2007 agreement, but that
ArcelorMittal intends to vigorously defend against any claims made
for damages in the second phase of the arbitration process,"
ArcelorMittal spokesman Tobin Postma said.
Phone calls to the International Court of Arbitration, which
handled the case, weren't immediately returned.
The ruling paves the way for Senegal to begin negotiations with
other companies to develop Famele, Mr. Latif Coulibaly said.
The world's largest steelmaker signed the $2.2 billion deal in
2007 with Senegal's government, according to a company press
release from that time. In return for the concession to a 750-ton
reserve of iron ore in the deeply poor highlands of eastern
Senegal, ArcelorMittal agreed to restore 750 kilometers of rail,
stretching across the arid country, to a new deep sea port in the
capital, Dakar, which the company agreed to build.
But in 2009, amid the global financial slowdown, ArcelorMittal
suspended its Senegalese operations amid plummeting steel prices.
The move prompted harsh words from Senegal's government--and took
place against a backdrop of rising resource nationalism in Africa,
where governments faced cash strains to build up roads and
ports.
-Alexis Flynn in London contributed to this article.
Write to Drew Hinshaw at drew.hinshaw@wsj.com
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