Johannesburg, South Africa — MININGREVIEW.COM — 05 May 2010 – Kumba Iron Ore Limited says it will review the basis on which to continue to supply iron ore to the South Africa unit of ArcelorMittal “’ the world’s biggest steel producer “’ if the companies fail to resolve a price dispute soon.
Kumba “’ a unit of global miner Anglo American “’ said in a statement here that ArcelorMittal South Africa had been incorrect in stating last month that Kumba would invoice the steelmaker at a discounted price until the dispute was resolved, and hold the steel firm liable for the difference between that price and the market price.
Kumba wants to charge market rates for iron ore supplies to ArcelorMittal South Africa, but Arcelor Mittal has said the deal with Kumba to supply iron ore at a discount was valid and binding.
Kumba in February terminated the long-term deal which allowed the steelmaker to receive ore from Kumba at a discount, and said it would sell to ArcelorMittal South Africa at market rates from 1 March.
Kumba “’ the world’s 10th largest iron ore producer “’ said it required ArcelorMittal South Africa to pay the discounted price of cost plus 3%, and to pay the difference between that price and the interim price it had proposed into escrow, or provide a guarantee for its payment if Kumba won the arbitration.
Kumba said ArcelorMittal South Africa has declined to accept this proposal so far, or to make a firm counter-proposal regarding an interim price or a payment mechanism.
“We have advised ArcelorMittal that should the parties not come to a firm agreement on an interim pricing mechanism in the near future, we will review the basis upon which we will continue to supply iron ore to ArcelorMittal,” Kumba added.