UPDATE:South Africa Court: Sishen Iron Ore Stake Award Was Mistake
15 Dicembre 2011 - 3:41PM
Dow Jones News
South Africa's Department of Minerals Resources was wrong to
award a stake in the country's largest iron ore mine to a little
known company, the High Court ruled Thursday.
Judge Raymond Zondo ruled that Kumba Iron Ore Ltd. (KIO.JO)
holds 100% of the Sishen iron ore mine, with the disputed 21.4% in
the operation previously held by a unit of ArcelorMittal (MT), now
in the hands of Kumba.
Ronnie Mendelow, the lawyer for Imperial Crown Trading 289
(Proprietary) Ltd., the company that had been awarded the 21.4%
stake, said it plans to appeal.
"The Court held that no other party may be granted the right to
mine iron ore or quartzite at the Sishen Mine," Kumba said. "The
Court also reviewed and set aside the grant of the prospecting
right to Imperial Crown Trading."
ArcelorMittal said that it believes the supply agreement it had
with Kumba still holds. That arrangement where Kumba previously
supplied 6.25 million metric tons at cost plus three percent is due
to go before an inquiry late 2012.
South Africa-based Kumba launched legal action in August,
accusing the government of wrongly awarding a lucrative mine stake
to politically connected ICT.
Kumba, a subsidiary of Anglo American PLC (AAL.LN), alleged that
ICT illegally tampered with documents during the process and, as a
result, its application for the mine stake should have been thrown
out. Instead, ICT secured the 21.4% lapsed stake to the Sishen iron
ore mine, previously owned by steelmaker ArcelorMittal South Africa
(ACL.JO). ArcelorMittal had missed a deadline to convert its right
to comply with new mineral regulations, so the right automatically
reverted to the government, which put it up for public tender in
May 2009.
ArcelorMittal had argued that when Kumba converted its right it
did for the whole 100% mining right.
In remarks to a High Court hearing in August, the DMR's lawyer,
Willie Vermuelen, said the department made the correct decision
because Kumba filed incorrectly and because the country's Mines Act
stipulates the DMR must work to get more previously disadvantaged
players into the industry.
In addition, DMR's legal counsel said Kumba went against
regulations by submitting its application a day before Arcelor's
right had expired, getting a DMR official to stamp the papers for
the next day, which was a public holiday.
A full judgment will be released Dec. 20.
-By Devon Maylie, Dow Jones Newswires; +27 11 783 7848;
devon.maylie@dowjones.com
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