Mining upstart will fight setback

The politically linked Imperial Crown Trading 289 has a long legal battle ahead of it. This week’s full judgment in the fight over the mining rights to Kumba’s Sishen iron-ore mine dealt the first judicial blow to its claim to a 21.4% share of the rights, previously held by ArcelorMittal.

The judgment gives full ownership of the Sishen rights to Kumba.
The judge determined under the Mineral and Petroleum Resources Development Act that a mineral right cannot be split. “This is a substantive judgment but we will appeal,” said the company’s lawyer, Ronnie Mendelow. “We believe we have strong grounds to appeal, but these will be based on different interpretations of the law.”

It is unclear how ICT will take its legal case forward, given how little its claims were referred to in Judge Raymond Zondo’s judgment released on Tuesday night. It also calls into question the value of a company that went from a potential revenue stream of billions to nothing with the stroke of a pen.

Mendelow said he did not want to discuss the arguments the company would employ until it had lodged its application for leave to appeal. But, he said, all was not lost. Provided that the company’s application was granted, that would suspend the operation of Zondo’s order. It would mean that the mineral-rights determination remained in an uncomfortable legal limbo, with the department of mineral resources unable to pronounce on Imperial Crown Trading’s mining-rights application until the court battles were finalised.

Mendelow also noted that Zondo’s order could impact on holders of mineral rights that are deemed split into undivided shares. Zondo’s reading of the Act meant that undivided shares simply did not exist. “It’s binding on a wide variety of people and, procedurally, this may be a hurdle to overcome,” he said.

The company’s directors include Archie Luha­be, former chairperson of the Mineworkers’ Investment Company, and Jagdish Parekh, a leading associate of the Gupta brothers, who have business links to the Zuma family. Imperial Crown Trading snaffled the prospecting rights of the 21.4% in May 2009 when ArcelorMittal failed to convert its old-order mining right to a new-order right. It subsequently applied for the mining rights to the portion.

But Zondo found that, when the department granted Kumba’s rights to be converted from old-order to new-order mining rights under the Act, it was awarded a sole and exclusive right. In other words, it was 100% of the mineral rights, rather than the 78.6% share that the Sishen Iron Ore Company, Kumba’s subsidiary, previously held.

Sishen, when applying for this conversion, was judged to have applied for a 100% fully converted right. In essence, because Sishen had 100%, the department had no business to accept or grant a prospecting-right application to Imperial Crown Trading. It seems unlikely that the company will take on the department in its appeal.

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