JSE-listed iron-ore miner Kumba Iron Ore (KIO) has been informed by the Department of Mineral Resources (DMR) that the 21,4% share in the Sishen mine that was reportedly "lost" by ArcelorMittal South Africa had been granted to a "third party". The identity of the recipient was not made available and DMR spokesperson Jeremy Michaels told Mining Weekly Online that he was not immediately in a position to comment on the matter.
A KIO spokesperson said KIO was aware of the identity of the recipient, but said that the company was not at liberty to disclose the name, which would also not be immediately recognisable to the general public.
Sishen Iron Ore Company (SIOC), in which KIO has a 74% stake, notified ArcelorMittal South Africa on February 5, 2010, that the steel company's failure to convert its "undivided share" in the Sishen mine from the old order to the new one, in line with the Mineral and Petroleum Resources Development Act, meant that it had lost its rights, and that the prevailing cost-plus 3% supply arrangement between SIOC and ArcelorMittal South Africa would, thus, be cancelled as from March 1, 2010.
ArcelorMittal South Africa, meanwhile, said that it had noted the KIO statement, but indicated that it had "no comment" on the latest development.
SIOC had indicated previously that it had applied for the residual 21,4% mining right previously held by Africa's largest steel producer.
However, rumours immediately began to emerge that others had also applied for the "unconverted" right, despite ArcelorMittal South Africa's assertion that its rights remained intact along with the supply agreement. In fact, both it and KIO indicated that the matter would be resolved through the dispute settlement processes outlined in the 2001 Iscor unbundling agreement, which could include arbitration.
Then, on Wednesday, KIO issued a note to shareholders stating that the interest had, in fact, been granted by the DMR "to a third party".
SIOC has lodged an appeal against the grant of the prospecting right. Meanwhile, a "surprised" KIO said it was currently engaged in discussions with the DMR "in relation to the 21,4% residual right in respect of the Sishen mine".
It is understood that meetings have already been held between the DMR and KIO on the matter an that the notice of appeal has been directed to Minister Susan Shabangu and the DMR DG Sandile Nogxina.
In its objection to the DMR, KIO noted that the recipient of the Sishen right had applied for a "prospecting right" over an area that it was already mining. SIOC, on the other hand, had applied for a "mining right".