Johannesburg, South Africa — MININGREVIEW.COM — 23 July 2010 – Arbitration between Kumba Iron Ore and ArcelorMittal over the disputed “cost plus 3%” iron ore supply contract could take between one and two years to complete, according to Kumba CEO Chris Griffith.
The two sides have agreed on an interim pricing policy which will last until the end of July 2011 while arbitration proceedings are carried out. “It’s a long process and it can be made longer if one of the sides is not in a hurry to get a decision, said Griffith.
“You should remember that it took three years to get a decision on the dispute between Kumba and ArcelorMittal over Sishen South which went to arbitration,” Griffith added when interviewed by Miningmx after the presentation of Kumba’s interim results in Johannesburg.
The arbitration decision regarding Sishen South went in favour of Kumba, and ruled that ArcelorMittal had no right to participate in that mine.
That decision “’ announced in October 2009 “’ is believed to have led, in turn, to the current confrontation between the two groups over the existing supply contract for the Sishen mine.
The first meeting chaired by the DTI took place on Monday. A second meeting was scheduled for yesterday afternoon, but the settlement was announced earlier in the day.
In terms of the interim pricing settlement, Kumba has dropped the price to be paid for iron ore sold to ArcelorMittal’s inland plants to US$70/tonne free-on-rail (FOR) from the original demand of US$80/t. Kumba also dropped an escalation clause on that price through which it would rise by 10% on a compounded basis until September 1, 2011, after which Mittal would pay the prevailing market price.
The price demanded for ore delivered to ArcelorMittal’s Saldanha plant remained unchanged at US$50/t.