/ 13 August 2010

‘Controversy is not the same as corruption’

ArcelorMittal CEO Nonkululeko Nyembezi Heita defended the steel giant’s bruised public image in Parliament on Friday, which took a knock after it announced its BEE deal including controversial company Imperial Crown Trading (ICT).

She said she accepted that ICT, was “controversial”.

“But controversy is not the same as corruption,” she told the portfolio committee on trade and industry.

ArcelorMittal announced the empowerment transaction earlier this week but questions have been raised regarding the partners to the deal- which include the President’s son Duduzane Zuma, as well as the influential Gupta family, close associates of the president.

Nyembezi-Heita railed against the trial of the company in the “court of public opinion” through its association with Imperial Crown Trading, particularly in the media.

ICT was granted a prospecting right over a 21% portion of the undivided mining rights to the Sishen iron ore mine, which is owned by mining giant Kumba Iron Ore. This portion is at the heart of a dispute between Kumba and ArcelorMittal. The supply agreement gave ArcelorMittal access to cheap iron ore. ICT won a prospecting right – a precursor to a mining right — over this 21% portion, which had formerly belonged to ArcelorMittal.

Disputing
Kumba, who also applied for this 21% share is disputing ICT’s award of the right in court.

ArcelorMittal has offered to buy ICT, whose shareholders are included in the BEE transaction, for R800-million on the proviso that it wins the case and can convert this prospecting right to a mining right.

“[ICT] was not given a mineral right by ArcelorMittal South Africa; it was given a mineral right by the department of mineral resources. Therefore if there was any wrong doing that, questions needs to be directed to that body,” said Nyembezi-Heita.

“Part of our due diligence will be to go and discuss with the department the basis on which the right was granted,” she said

“We cannot be put in this court of public opinion — that we have dealt with a corrupt company that was given a mineral right by this self same regulator.”

Should ICT prevail in the application and win over Kumba, ArcelorMittal management could not justify failing to attempt to bring that right “back in house” she argued.

Status quo
Particularly as this would re-create “the status quo” and once again allow the company access to cheap iron ore.

ArcelorMittal had to settle for the partners that came on board through the deal, in order to regain access to the rights intimated Nyembezi-Heita.

“The individuals that ICT brought to the party are the individuals that ICT brought to the party,” she said. “They are not of ArcelorMittal’s choosing.”

“If you do want to solve this problem— at a certain point in time you do what has to be done.”

But she said this came with the caveat that nothing unlawful is done and that all of ArcelorMittal’s commercial interests are satisfied.

“If we do find something unlawful has happened we will stop. We will fail the transaction, it will not close and the money will not be paid.”