Johannesburg, South Africa — MININGREVIEW.COM — 21 December 2010 – The former chairman of Kumba Iron Ore “’ Lazarus Zim “’ says he resigned from the board of the Anglo American steel unit to start a new steel company, and to avoid the perception of a conflict of interest.
Reuters reports that Zim had already tried to distance himself from the world’s 10th largest iron ore supplier when Kumba began a legal dispute over mineral rights with ArcelorMittal South Africa, due to his connections with a person in the deal.
“The new steel company will be a totally new player. There will be some players involved from outside the country,” Zim told Reuters, adding that more details would be given in the new year.
He said he had to resign from the Kumba board to avoid potential conflict of interest should the iron ore producer be a supplier to the new company. “If we are in the steel business, we will have to get iron ore from somewhere. I can’t be a chairman and potentially a client of Kumba at the same time,” he added.
Zim had already excused himself from involvement in a dispute over Kumba’s Sishen iron ore mine because of his relationship with Jagdish Parekh.
Parekh is an influential shareholder in Imperial Crown Trading (ICT), a little-known company which was awarded a prospecting right over a stake in Sishen, for which ArcelorMittal South Africa previously held a mining right.
In February Kumba terminated a long-term deal under which it sold ore to ArcelorMittal at a discount, after the steelmaker had failed to convert its rights over a 21.4% stake in Kumba’s Sishen mine into a new right, as required by law.
The government granted ICT a prospecting right over the stake in Sishen, a decision which Kumba is contesting in court. Meanwhile ArcelorMittal said in August it would buy ICT to regain the right.
The proposed deal was widely criticised in the South African media, which said it had been influenced by powerful figures connected to the ruling African National Congress.