South Africa awards ArcelorMittal’s disputed Sishen mine stake to Imperial Crown
22 Mar 2010
ArcelorMittal's disputed 21.4 per cent stake in Kumba Iron Ore's (KIO) Sishen mine has been arbitrarily awarded by the South African government to Imperial Crown Trading 289, a little-known company, but known to have close links to the African National Congress.
The government awarded Imperial the 21.4-per cent stake in the Sishen mine last week after ArcelorMittal's South African subsidiary, ArcelorMittal South Africa failed to convert its mining rights at the mine by the April 2009 deadline.
Under a new South Africa's mining legislation, mining companies had to convert their mining rights by 30 April 2009, from private holding, to the new legislation where the state is now the custodian of all mineral rights in the country and issues exploration and exploitation licences.
Since ArcelorMittal failed to convert its mining rights, Anglo American, a diversified mining group, shrewdly exploited this law last month and cancelled a 2001 agreement between its subsidiary Sishen Iron Ore Company (SIOC) and ArcelorMittal to supply iron ore to the steel maker on the agreed cost plus 3 per cent basis, but said that it would be willing to supply at market prices. (See: ArcelorMittal's Kumba iron-ore deal jettisoned by Anglo American)
Luxembourg-based ArcelorMittal had threatened legal action against SIOC for terminating a valid agreement and had said there was no need to convert its 21.4 per cent stake in the mine, since it was a right to an already converted right.
Peter Leon, chairman of the mining law committee of the International Bar Association is reported to have said that mining companies were given five years until May 2009, to renew their rights, and if a company had not renewed its rights, the rights would be lost and the state could grant the license to a third party.
