Kumba, ArcelorMittal South Africa Start Supply Talks

Anglo American Plc’s Kumba Iron Ore unit and ArcelorMittal South Africa Ltd., the continent’s biggest steelmaker known as AMSA, said they’re in talks to secure a permanent deal for delivery of the raw material.

Kumba in December agreed to a one-year deal with AMSA to supply as much as 4.8 million metric tons of iron ore from its Sishen mine, Africa’s largest iron-ore operation, to the local unit of the world’s biggest steel producer at an average price of $65 a ton. The arrangement ends on Dec. 31.

“Discussions are under way on the possibility of a new supply agreement for iron ore from Kumba’s mines, including Sishen and Thabazimbi,” AMSA, based in Vanderbijlpark, 70 kilometers (44 miles) south of Johannesburg, said in a statement.

Kumba in March 2010 canceled a 2001 agreement to supply AMSA with 6.25 million tons of ore a year at cost plus three percentage points from Sishen after the steelmaker’s partial mining right over the operation expired the previous year. They delayed arbitration until court proceedings over the right are concluded.

South Africa’s Supreme Court of Appeal in March dismissed an appeal by the state and Imperial Crown Trading 289 (Pty) Ltd. to have rights to the complex reinstated. A former shareholder of ICT, Jagdish Parekh, was a business associate of President Jacob Zuma’s son, Duduzane. The case continues in the Constitutional Court. Duduzane Zuma is not a shareholder in ICT.

Kumba’s Sishen Iron Ore Co. controls and operates the Sishen mine, while Exxaro Resources Ltd. owns 20 percent of SIOC, as the unit is known.

Kumba “and AMSA are hoping that their discussions will lead to agreement on the long-term supply of iron ore from SIOC’s mines,” Kumba said in an e-mailed statement today.

(Corrects to show that Duduzane Zuma’s former business associate is no longer an ICT shareholder in fifth paragraph of story published on Sept. 27.)
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