Kumba launches broadside against Imperial's prospects
Iron ore mining giant Kumba came out guns blazing in the North Gauteng High Court on Tuesday, claiming that upstart rival Imperial Crown Trading (ICT) had submitted an “incomplete, manipulated and fraudulent” prospecting right to the department of mineral resources.
Kumba has applied to the court to set aside the department’s award of a prospecting right in 2009 over a portion of the world’s biggest opencast iron ore mine—Sishen in the Northern Cape—which Kumba owns through its subsidiary, the Sishen Iron Ore Company (Sioc).
Kumba’s allegations of fraud and forgery against ICT, which also form part of a separate criminal matter, have shaken the department of mineral resources and the process by which it vets and awards licences to mine in South Africa to its very core.
It has also not escaped attention that Imperial’s shareholders include several politically well-connected figures. These include Prudence “Gugu” Mtshali, who is said to be romantically linked with Deputy President Kgalema Motlanthe; and Jagdish Parekh, a close business associate of the Gupta family, who in turn do business with members of President Jacob Zuma’s family.
Both Kumba and ICT are claiming a 21.4% interest in the mine, worth several billion rands, with Kumba already controlling the remaining 78.6%. Both companies apparently submitted applications to the department for the unclaimed minority stake on the same day, May 4 2009.
Kumba’s counsel, Mark Antrobus SC, argued in court on Tuesday that Imperial should not have been awarded a prospecting right by the department because:
- Kumba already held a right to mine at Sishen, which cannot be superseded by a prospecting right in the same area of land;
- Imperial copied sections of Kumba’s own application, included certified title deeds of the area in question, and passed it off as their own;
- Department officials in the Northern Cape licencing office may have been complicit in sharing Kumba’s documentation with ICT;
- Imperial included other apparently forged documents in its application, including an two-year old letter from a drilling company, which purported to show that Imperial had prospecting capacity;
- Imperial only submitted a partial application on May 4, but fraudulently backdated missing sections over the next few days, again with the complicity of departmental staff in the regional office; and
- The regional department head had initially recommended to the national department decision-maker, deputy director general Jacinto Rocha, that Imperial’s prospecting application be refused; but Rocha overruled the recommendation without the regional office’s accompanying reports to guide him.
‘Need to comply with the law’
“The fundamental nature of mining rights is that you need to be exact, and you need to comply with the law,” Antrobus said.
The court will hear counter-argument from the department and from Imperial over the next two days.
Earlier on Tuesday, another Kumba senior counsel, advocate Chris Loxton argued why another party to the case—Arcelor Mittal South Africa—should not be considered as the legitimate holder of the disputed 21.4% stake in Sishen.
Arcelor Mittal had held the minority stake in the mine prior to the expiry of old order mineral rights on April 30 2009.
The steelmaker’s failure to renew its right led—a few days later—to Kumba and ICT’s rival and now contested bids for a right to acquire what they both believe was the vacant minority stake.
Loxton said that Arcelor Mittal had “fallen asleep at the wheel and was looking the other way when the five year [renewal] deadline passed”.
Arcelor Mittal had opened proceedings on Monday, arguing that its minority stake in Sishen was an undivided one, and that when Kumba had converted its majority stake it did so on Arcelor Mittal’s behalf.
Arcelor Mittal’s senior counsel Michael Kuper accused Kumba of “a very late stab in the dark in the back” in later applying for Arcelor Mittal’s portion of the mine, and cancelling a favourable iron ore supply deal between the two parties.
Judge Ray Zondo will have to adjudicate between Kumba’s and Arcelor Mittal’s competing interpretations of the Minerals and Petroleum Resources Development Act as it applies to jointly-held stakes in a single mine.
Zondo cut a patient and jovial figure, as he weighed up the protagonists’ claims, which have been made in thousands of pages of accompanying submissions.
The hearing has been set down for the entire week.
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