HomeBase MetalsGovernment wants disputed Kumba iron ore sold at cost plus 3%

Government wants disputed Kumba iron ore sold at cost plus 3%

Part of Kumba’s
Sishen iron ore
Pretoria, South Africa — MININGREVIEW.COM — 26 November 2010 – The South African government says it wants iron ore from a disputed portion of the Sishen mine “’ the country’s biggest ore deposit “’ to be sold at cost plus 3% while it formulates a new pricing model for the steel industry.

Kumba Iron Ore Limited “’ a unit of Anglo American plc “’ has filed a lawsuit aimed at overturning the government’s decision to award 21.4% of the Sishen mining rights to Imperial Crown Trading. Imperial is being acquired by ArcelorMittal South Africa Limited “’ the South African unit of the world’s biggest steelmaker.

“A government task team will hold talks with the companies with the objective of providing cost plus 3% access to the 21.4% Sishen mining rights to ArcelorMittal South Africa or other steel producers,” government spokesman Vusi Mona told reporters here. “The charge should stand until a government-determined ‘developmental pricing model’ is implemented that will result in domestic steel prices being no higher than the lowest quartile of global prices,” he said.

“It is not possible for Kumba to enter into any agreements before the legal processes are concluded,” the company said in an e-mailed statement.

“We cannot comment at this stage as we have not seen the full report presented to Cabinet,” Vanderbijlpark-based ArcelorMittal South Africa said in an e-mailed response to questions.

The companies are currently in arbitration over the ore supply contract.