Sishen Iron Ore, a subsidiary of Kumba Iron Ore, and ArcelorMittal have entered into an agreement to transfer Thabazimbi mine to ArcelorMittal.Thabazimbi was a captive mine owned and run by Sishen Iron Ore until 2014, but it supplied ore exclusively to and was funded by ArcelorMittal South Africa.
As a result, ArcelorMittal is accountable for 96% of the mine’s current rehabilitation liability, with Sishen Iron Ore responsible for the site’s management and the remaining liability. The transfer will simplify this arrangement by making ArcelorMittal solely responsible for Thabazimbi’s closure and rehabilitation.
Mining operations at Thabazimbi ceased on 1 September 2016. The identified assets and liabilities of the mine will be transferred at a purchase consideration of R1 plus the assumed liabilities. The remaining 63 Sishen Iron Ore employees currently engaged in mine rehabilitation and the preparation and finalisation of the mine closure plan will transfer to ArcelorMittal on comparable terms, conditions and benefits.
The needs of the Thabazimbi community have been identified and incorporated into the mine’s social closure plan. ArcelorMittal, as part of its current financial obligation, will take over the entire social closure plan and will be responsible for the execution, implementation and funding of these identified projects, while Sishen Iron Ore will retain a right of oversight.
The transfer is dependent on certain conditions being met, most notably: competition authority approval, cession of the Thabazimbi mining rights in terms of section 11 of the Mineral and Petroleum Resources Development Act and a satisfactory due diligence investigation by ArcelorMittal South Africa.
On fulfillment of these conditions, the employees, assets and liabilities will transfer to ArcelorMittal. If the conditions are not satisfied by 28 April 2017 (or a later date agreed to by the companies), the agreement will lapse and Sishen Iron Ore will proceed with the closure of the mine.
“In line with our strategy to manage our costs more efficiently in what is a particularly difficult time for the local steel industry, this agreement allows us to take full management control of the processes and costs related to the rehabilitation liability at the Thabazimbi mine.
"In addition we will investigate the feasibility of different options to possibly restart operations at the mine in order to supplement the company’s sources of iron ore and with the potential of job creation” said ArcelorMittal South Africa CEO Wim De Klerk.
Themba Mkhwanazi, CEO of Kumba Iron Ore said a transfer of the Thabazimbi mine to ArcelorMittal demonstrates Kumba’s continued support for local beneficiation.
"This also simplifies the contractual relationship between the parties around the effective management of rehabilitation. We are pleased with this development as it would be to the benefit of both companies and stakeholders,” he said.