Kumba’s Sishen iron ore mine

Pretoria, South Africa --- MININGREVIEW.COM --- 11 March 2010 - Kumba Iron Ore Limited ‒ a unit of Anglo American plc ‒ is in talks with the South African government about the rights in the country’s Sishen mine that ArcelorMittal South Africa Limited  relinquished by failing to renew them in time.

Kumba is discussing the 21.4% holding in its Sishen Iron Ore Company unit with the Department of Mineral Resources, the company said here in an e-mailed response to questions from Bloomberg News. The right reverted to the state after the steelmaker failed to renew it, said department spokesman Jeremy Michaels.

“If the rights are lost, the state can grant the licence to someone else,” Peter Leon, chairman of the Mining Law Committee of the International Bar Association, said by phone from London. Mining companies were given five years, until May 2009, to renew their rights, he added.

Kumba said on 26 February that it had cancelled a nine year-old supply contract with ArcelorMittal South Africa because the steelmaker hadn’t renewed certain mining rights. Under the deal, Kumba supplied ore at cost plus 3%.

Bloomberg News reports that while at the time the pact was deemed necessary for the steelmaker’s survival, it now boosts the profits of ArcelorMittal South Africa and depresses those of Kumba.

Marion Green-Thompson, a spokeswoman for ArcelorMittal South Africa, said that the issue of who was responsible for renewing the mining rights was key to the dispute, but declined to comment further.