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ArcelorMittal, Kumba Appoint Arbitrator as Row Drags

Dec. 2 (Bloomberg) -- ArcelorMittal South Africa Ltd., a unit of the largest steelmaker, and supplier Kumba Iron Ore Ltd. appointed a third arbitrator to try to resolve their dispute over prices that has dragged on for the past nine months.

Negotiations between the steel producer and Kumba, the iron-ore unit of Anglo American Plc, are continuing, ArcelorMittal South Africa said in a statement today.

In March, Pretoria-based Kumba canceled a nine-year deal to supply ore from its Sishen mine to ArcelorMittal at 3 percent above the cost of production, after the steelmaker missed a deadline to renew its mineral rights. ArcelorMittal said the decision could force it to close its Saldanha mill, halt all exports and fire as many as 4,000 workers.

The dispute “will be a lengthy process,” Mohamed Kharva, an analyst at Nedcor Securities who has a “sell” rating on ArcelorMittal South Africa, said in an interview from Cape Town.

The producer, controlled by Luxembourg-based ArcelorMittal, said in a separate statement it’s also continuing to consider the sale of a stake in its business to black investors.

South Africa, seeking to ameliorate the effects of racial discrimination during white rule under apartheid, sets a minimum stake in companies that must be held by black investors.

ArcelorMittal South Africa said Aug. 10 it would sell a 26 percent interest to a group of investors including Duduzane Zuma, the son of the country’s President Jacob Zuma. The deal is opposed by minority shareholders including Public Investment Corp., Africa’s largest pension fund manager, and Sanlam Ltd.

“There’s been lots of resistance and criticism,” said Paul Theron, managing director of Johannesburg-based Vestact Pty Ltd., which manages more than 1 billion rand ($143 million).

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