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Mittal now expects SIOC arbitration only in second half of 2013
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31st October 2012
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JSE-listed Arcelor Mittal South Africa (Mittal) was anticipating the long-awaited arbitration hearing between itself and the Sishen Iron Ore Company (SIOC), regarding the status of an iron-ore supply agreement, to take place during the second half of 2013.

However, CEO Nonkululeko Nyembezi-Heita said in a conference call on Wednesday that the commencement of the process, which was initially scheduled to take place in May, depended on the court date for the appeals hearing relating to a mineral rights dispute at the Sishen property.

The appeal process had been initiated by Imperial Crown Trading (ICT) and the Department of Mineral Resources, following the High Court judgement delivered in December 2011, which stated hat SIOC owned 100% of the rights in the Sishen mine and set aside the grant of the prospecting rights to ICT.

“The plan is to have the Supreme Court of appeals hearing in the first quarter of next year, once that outcome is delivered we will then initiate the arbitration,” Nyembezi-Heita noted.

The interim pricing agreement, which Mittal and SIOC had entered into following the dispute, expired at the end of July. Meanwhile, Mittal and SIOC had agreed on the supply of tonnage short-supplied to Mittal during the previous year, when the Sishen mine was shut. Tonnage would be supplied from August to December.

However, Nyembezi-Heita said that, while production at Mittal’s Saldanha plant had been reduced, none of the company’s mills were forced to halt production as a result of the iron-ore shortage.

“Sishen mine did go into a production shut, but it happened at a time when Kumba had a stocks, so they did continue to deliver iron-ore to our mills at a limited degree. We received iron-ore for the bulk of the period,” she added.

The parties also continued to engage in a mediation process that was being facilitated by an independent mediator appointed by the Department of Trade and Industry, for the continued supply of iron-ore after December 31 and until the arbitration process was finalised.

CFO Rudolph Torlage said although the company spent R1.1-billion last year to purchase additional iron-ore, it only anticipated spending an additional R720-million in 2012.

Edited by: Terence Creamer

 

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