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South Africa's Kumba Iron Ore gets control of mine as dispute ends
October 13, 2016 / 10:16 AM / 9 months ago

South Africa's Kumba Iron Ore gets control of mine as dispute ends

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JOHANNESBURG, Oct 13 (Reuters) - South Africa's Kumba Iron Ore has won full control of its largest mine, the firm said on Thursday, after a seven-year dispute was resolved.

The mines department last year awarded Kumba, a unit of Anglo American, the 21.4 percent of the mining rights it did not already hold in the Sishen mine, but attached conditions, which the firm had appealed against.

The appeals process has now been completed, Kumba said, after it accepted some conditions, such as a requirement to maintain a supply agreement with steel producer ArcelorMittal South Africa.

Until 2009, Kumba and ArcelorMittal respectively held 78.6 percent and 21.4 percent of the mining rights in Sishen, which guaranteed iron ore supply to the steelmaker's mills.

Like other South African mining companies, Kumba was compelled by a law that took effect in 2004 to re-apply for the mining rights to Sishen, but ArcelorMittal missed the deadline.

The government awarded the steelmaker's rights to Imperial Crown Trading (ICT), which had ties to officials in the ruling African National Congress at the time and little experience in mining, drawing criticism from analysts and investors.

Kumba took legal action and in 2013 the Constitutional Court ruled that the iron ore producer's Sishen unit was the only firm that could apply for the rights.

"The Department of Mineral Resources has, after taking all the relevant considerations into account, granted the residual 21.4 undivided share of the mining right for the Sishen mine to Kumba's subsidiary, Sishen Iron Ore Company," Kumba said.

The Sishen mine, located in the arid northwestern part of the country, produced 31 million tonnes of iron ore last year.

Shares in Kumba were up 3 percent at 129.91 rand by 0846 GMT as Chinese data pointed to firm steel demand. (Reporting by TJ Strydom; Editing by James Macharia and Elaine Hardcastle)

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