AncelorMittal claims Sishen must continue supplying iron ore

Commenting on the North Gauteng High Court judgement in relation to the undivided Sishen mining rights, ArcelorMittal said on Wednesday that it was of the view that Sishen Iron Ore Mining Company Limited (SIOC) was obliged to continue the supply of iron ore in terms of the existing agreement.

The court rendered a decision on the matter last week but its full judgement was only released on Wednesday.

The judgment followed a review application brought by SIOC against the mineral resources department and Imperial Crown Trading 289 (Pty) Limited (ICT).

ArcelorMittal was joined in the application at the request of SIOC. ArcelorMittal's argument was that SIOC has held a 100% mining right since May/June 2008 when it applied (in December 2005) to convert its old order mining right into a mining right under the Minerals and Petroleum Resources Development Act (MPRDA).

Judge Raymond Zondo agreed with ArcelorMittal's assertion that SIOC was granted a 100% mining right in accordance with the MPRDA. His judgment stated that, "….AMSA (ArcelorMittal South Africa) has been successful and must be granted the main orders that it seeks, if not all the orders it seeks".

"ArcelorMittal South Africa therefore believes his ruling confirms the view that SIOC has an ongoing obligation to supply the 6,25Mt of iron ore at cost plus 3% in terms of the existing, valid and legally-binding, agreement," the steelmaker said.

While SIOC disputed the department's awarding of a 21.4% prospecting right to ICT in relation to the Sishen mine, the court ultimately found that the acceptances by the department of any application for a mining or prospecting right relating to iron ore lodged after 2008, including SIOC's application for a 21.4% mining right, were void from the outset.

"The court has therefore set aside the grant of the prospecting right by the [department] to ICT," ArcelorMittal said.

Nonkululeko Nyembezi-Heita, ArcelorMittal South Africa's chief executive officer, said: "Our assertion has been that when SIOC converted its old order mining right in 2008, it did so in relation to 100% of the iron ore on the Sishen mining area. Our case was that no other party, including ArcelorMittal South Africa, could apply or be granted any portion of the Sishen mine right pursuant to SIOC having been granted a 100% mining right.

"So, while ArcelorMittal South Africa agreed that ICT should not have been awarded a prospecting right, we were seeking and were granted relief that was inconsistent with SIOC's position as SIOC was contending that it was only granted a 78.6% mining right — indicating that a 21.4% right was available.

"This position was also adopted by SIOC in the arbitration and it formed the premise upon which SIOC based its contention in the arbitration proceedings that it is no longer obliged to supply iron ore to ArcelorMittal South Africa at cost plus 3% in terms of the agreement.

Mining rights
"The premise of SIOC's contention in the arbitration proceedings has accordingly now been found to be incorrect."

Judge Zondo explained his ruling: "It seems to me that since the minister [of mineral resources] granted Sishen the sole and exclusive full mining right to the iron ore in 2008, which was before the expiry of the prescribed five-year period for lodging of old order mining rights, AMSA could not, therefore, competently lodge its old order mining right at any stage after the grant to Sishen of the converted mining right but before the expiry of the five year period on 30th April 2009.

If AMSA purported to lodge its old order mining right, the minister would not in law have been able or competent to convert it into a mining right [as contemplated in item 7(3) of the Schedule]. The minister could not competently do so because there would have been no mining right available to her into which to convert AMSA's old order mining right since she had already granted the full 100% mining right to Sishen. She could not give what she did not have."

All parties must, if required, submit written representation in relation to interdicts in terms of the judgment by January 24 2012 and the respondents will be required to answer by February 1 2012. Should the respondents wish to reply, they must do so by February 7 2012.

With regard to costs Zondo has not, at this stage, made any order as no argument on costs has been addressed to the court. Following the release of the judgment, submissions on costs can be made in due course. — I-Net Bridge

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