Johannesburg, South Africa — MININGREVIEW.COM — 11 August 2010 – ArcelorMittal South Africa Limited “’ a unit of the world’s largest steelmaker “’ has purchased Imperial Crown Trading for R800 million in the latest twist in the saga over participation in Kumba’s Sishen iron ore mine.
ArcelorMittal CEO Nonkululeko Nyembezi-Heita commented that, “whilst we continue to vigorously pursue our arbitration with Kumba Iron Ore Limited, we feel our acquisition of ICT is a prudent decision based on strong commercial grounds, given that vertical integration is a crucial component of ArcelorMittal South Africa’s ability to remain competitive.
The deal has been linked into a broad-based black economic empowerment transaction announced at the same time which will put 26% of ArcelorMittal into the hands of the Ayigobi consortium, as well as 8 500 ArcelorMittal employees.
Nyembezi-Heita said the shareholders of ICT have been included, “inter alia as participants in the Ayigobi consortium”.
That consortium is led by Sandile Zungu, while its participants include Oakbay Investments “’ which is owned by the Gupta family – and Jagdish R Parekh, who is a substantial shareholder in ICT. Zungu, the Gupta family and Parekh are all believed to be very well connected politically to the present government.
Market speculation that ArcelorMittal was considering such a move first surfaced about a fortnight ago.
“Imperial’s only asset is a 21.4% prospecting licence at the mine in the Northern Cape,” ArcelorMittal South Africa said a statement.
The government awarded the Sishen rights to Imperial in March after ArcelorMittal South Africa had failed to apply for its licence to be renewed by a May 2009 deadline. The rights had previously given the steelmaker a competitive advantage by allowing it access to iron ore at below-market prices. Kumba “’ owned by Anglo American Plc “’ has maintained that the award to Imperial was unlawful.
Kumba has also been fighting to get Imperial’s rights at Sishen and has challenged the government’s award to Imperial in court.
The Department of Mineral Resources “incorrectly accepted the application and incorrectly granted the prospecting rights” to Imperial, Kumba said in an e-mail. “Kumba believes that it is the only company which should be granted these rights.”