Johannesburg, South Africa — MININGREVIEW.COM — 20 July 2010 – The South African government says Kumba Iron Ore and ArcelorMittal are committed to reaching an agreement regarding their dispute over the price of iron ore.
The minister of trade and industry had called a meeting yesterday after the South African unit of ArcelorMittal had said it might need to close its 1.2 million-tonne steel plant at Saldanha Bay due to the price dispute.
In February, Kumba “’ a unit of global miner Anglo American Plc “’ terminated a long-term deal under which it sold iron ore to ArcelorMittal at a discount, saying it would sell at market rates from March.
The dispute has been in mediation since.
“There was a constructive engagement toward seeking a solution to the current dispute between Kumba and ArcelorMittal,” Department of Trade and Industry spokesman Sidwell Medupe said in a statement after yesterday’s meeting. “All parties committed themselves to reaching an agreement which will put the country first.”
Both companies have agreed to meet on Thursday for further discussions, he added.
ArcelorMittal’s unit rejected Kumba’s proposed two new pricing systems while the dispute was in arbitration.
It said the proposals tabled by Kumba would have had an extremely negative impact on its profitability. Up to 4 000 jobs would be affected by the closure, it added.
Pending the outcome of arbitration, Kumba had proposed to supply the steelmaker with iron ore at cost plus 3% from its subsidiary Sishen Iron Ore Company (SIOC), with the difference from the market price being paid into an escrow account.
Kumba’s second proposal was to supply the steelmaker at a price of US$50 per tonne of iron ore delivered to its Saldanha Steel plant and US$80 per tonne delivered to the steel-maker’s inland plants, pending the outcome of arbitration.