South Africa Court: Sishen Iron Ore Stake Award Was Mistake
December 15 2011 - 6:39AM
Dow Jones News
South Africa's Department of Minerals Resources was wrong to
award a stake in the country's largest iron ore mine to a little
known company, the High Court ruled Thursday.
Judge Raymond Zondo ruled that Kumba Iron Ore Ltd. (KIO.JO) now
holds 100% of the Sishen iron ore mine, with the disputed 21.4% in
the operation previously held by a unit of ArcelorMittal (MT), now
in the hands of Kumba.
Imperial Crown Trading 289 (Proprietary) Ltd., the company that
had been awarded the 21.4% stake, said it plans to appeal.
South Africa-based Kumba launched legal action in August,
accusing the government of wrongly awarding a lucrative mine stake
to politically connected ICT.
Kumba, a subsidiary of Anglo American PLC (AAL.LN), alleged that
ICT illegally tampered with documents during the process and, as a
result, its application for the mine stake should have been thrown
out. Instead, ICT secured the 21.4% lapsed stake to the Sishen iron
ore mine, previously owned by steelmaker ArcelorMittal South Africa
(ACL.JO). ArcelorMittal had missed a deadline to convert its right
to comply with new mineral regulations, so the right automatically
reverted to the government, which put it up for public tender in
May 2009.
In remarks to a High Court hearing in August, the DMR's lawyer,
Willie Vermuelen, said the department made the correct decision
because Kumba filed incorrectly and because the country's mines act
stipulates the DMR must work to get more previously disadvantaged
players into the industry.
In addition, DMR's legal counsel said Kumba went against
regulations by submitting its application a day before Arcelor's
right had expired, getting a DMR official to stamp the papers for
the next day, which was a public holiday.
-By Devon Maylie, Dow Jones Newswires; +27 11 783 7848;
devon.maylie@dowjones.com
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