JOHANNESBURG (miningweekly.com) - The iron-ore mineral right that ArcelorMittal South Africa "lost" at the Sishen iron-ore mine has been awarded to Imperial Crown Trading 289, the Department of Mineral Resources (DMR) said on Thursday.
DMR spokesperson Jeremy Michaels told Mining Weekly Online that the DMR had awarded the prospecting right for a 21,4% undivided share in the Sishen mine to the little-known, but politically-connected Imperial Crown.
The company reportedly has close links with the governing African National Congress.
Michaels said that, as the previous holder of the right, ArcelorMittal South Africa, had failed to apply for its conversion to a new-order right, that right had reverted to the State, which then awarded it to Imperial Crown.
Mining Weekly Online understands that JSE-listed Kumba Iron Ore (KIO) had met with the DMR on the awarding of the right to "third party" Imperial Crown and that a notice of appeal had been directed to Mineral Resources Minister Susan Shabangu and the DMR DG Sandile Nogxina.
KIO associate company Sishen Iron Ore Company (SIOC), which mines iron-ore at the Sishen mine in the Northern Cape, informed ArcelorMittal South Africa in February that it would no longer be supplying iron-ore to the steelmaker at the agreed cost-plus-3% price as a result of its right to a 21,4% undivided stake of the operation had been lost.
The loss had come about when ArcelorMittal South Africa had reportedly failed to gain a new order right prior to last year's April deadline.
Imperial Crown beat SIOC to the right reportedly owing to its black economic empowered status, and despite the fact that the SIOC (which is also empowered with JSE-listed Exxaro, workers and surrounding communities as shareholders and/or beneficiaries) reportedly applied for the right on the same day as Imperial Crown.
DMR also moved ahead with the granting to Imperial Crown despite claims by ArcelorMittal South Africa that it did not need to convert the 21,4% undivided share in the mine, owing to the fact that it was a right to an already converted right.
This legal defence, and others, were key in its declared dispute with SIOC, where ArcelorMittal South Africa was aruing that the 2001 supply agreement, which entitled the steel company to 6,25-million tons of Sishen ore at cost plus 3%, remained intact. The agreement was forged during the unbundling of the then Iscor, into seperate steel and mining entities.
The dispute was meant to move into a resolution phase during March, which could include arbitration. However, the latest development would probably mean that both ArcelorMittal South Africa and KIO's SIOC, would need to turn their legal attentions to the DMR.
KIO has already questioned how it was possible for DMR to award a "prospecting right" to Imperial Crown at an operating mine, while ArcelorMittal will, no doubt, be considering action to restore its "right to the right", or to seek compensation in what would be an massive expropriation claim - with reporting by Terence Creamer.