JOHANNESBURG (miningweekly.com) - The Department of Mineral Resources (DMR) has confirmed to Mining Weekly Online that the 21,4% undivided share that ArcelorMittal South Africa had hitherto owned in the Sishen iron-ore mine had reverted to State custodianship, in line with the prescripts of the Mineral and Petroleum Resources Development Act (MPRDA).

Spokesperson Jeremy Michaels said that the DMR had held separate meetings with both ArcelorMittal South Africa and Kumba Iron Ore (KIO), the majority shareholder in Sishen Iron Ore Company (SIOC), which cancelled a supply agreement with the steel group from March 1, 2010, citing as its key reason the failure of the company to convert its rights from the old to the new order by the April 30, 2009, deadline.

"In terms of the MPRDA, the State is the custodian of the country's minerals and the mining right in question has, therefore, reverted to the State," Michaels told Mining Weekly Online in response to questions.

But he added the DMR saw the dispute on the matter as one between two private entities and that it was "treating it as such".

ArcelorMittal South Africa indicated to Mining Weekly Online that the dispute had entered a delicate phase and would not be drawn on whether it had met with government, nor on whether it had been informed of DMR's position on the mineral rights in questions.

KIO CFO Vincent Uren told Mining Weekly Online that he was not aware of the DMR pronouncement, but confirmed that there had been communication between the company and the department - a fact, which he said had been highlighted in KIO's most recent notice to the stock exchange.

SIOC was still supplying iron-ore to the JSE-listed steel group and had proposed an interim pricing arrangement. Mining Weekly Online understands that SIOC has given ArcelorMittal South Arica until mid-March to accept or reject this interim arrangement.

But it is understood that SIOC was keen to transition to selling the equivalent 6,25-million tons on full commercial terms to the steel company. It has also confirmed that it is in talks with the DMR in relation to "the residual 21,4% old-order mining rights in respect of the Sishen mine".

ArcelorMittal South Africa continues to argue that it was of the "firm opinion" that the long-term supply agreement remained "valid and binding" and that it would take "all steps necessary to protect its shareholders in this regard".

A dispute-resolution process, which could include arbitration, was being pursued in line with the initial 2001 unbundling agreement, which saw Iscor separated into a steel entity, ArcelorMittal South Africa, and an iron-ore miner, KIO.