SCA dismisses Sishen challenge

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BR Sishen  7302 Bloomberg South Africa's Kumba Iron Ore, a unit of Anglo American, said on Thursday the Supreme Court of Appeals had dismissed an appeal by the mining ministry and Imperial Crown Trading against the mineral rights it holds at its Sishen mine. An excavator loads iron ore into a haul truck at the Sishen open cast mine, operated by Kumba Iron Ore Ltd., an iron ore-producing unit of Anglo American Plc, in Shishen, South Africa. Kumba Iron Ore Ltd. may decide on the next stage of its Sishen-Saldanha expansion in 2014, the company said in a presentation on its website today. Photographer: Nadine Hutton/Bloomberg

Johannesburg - The Supreme Court of Appeal ruled on Thursday that the Sishen Iron Ore Company (SIOC) is the exclusive holder of a converted mining right for iron ore on Sishen Mine properties.

It dismissed an appeal by the minister for mineral resources and Imperial Crown Trading (ICT) against a ruling by the High Court in Johannesburg in 2011.

The high court found that SIOC became the exclusive rights holder on May 5 2008, and it set aside ICT's prospecting right in relation to 21.4 percent of the Sishen Mine.

The dispute about the 21.4 percent mining right arose out of disagreement between Anglo American subsidiary Kumba Iron Ore and Arcelor Mittal SA (AMSA).

In 2001, as part of Iscor’s unbundling, it was agreed that a 21.4 percent stake in mineral rights at the Sishen mine would vest in the company which is now AMSA.

At the time, it was agreed that Sishen would supply AMSA with iron ore at up to 6.25 million tons a year, at cost plus three percent.

When AMSA failed to convert its old order mining right in 2009, Kumba said it would sell its iron ore to the steel giant at market prices.

An undivided prospecting right was granted to ICT in relation to 21.4 percent stake in Sishen Mine. Kumba, which owns 74 percent of the SIOC, also applied to the department for the lapsed AMSA rights.

On Thursday, the SCA found that the SIOC had held an undivided 78.6 percent share in the right to iron ore on the Northern Cape property and that when it converted its old order mining right on May 5, 2008, it became the holder of the sole and exclusive mining right.

The SCA found that its mining authorisation clearly related to all the properties. “It could not be otherwise,” the court held, and ruled that there were therefore no rights to transfer.

There was no share of the “old order mining right” or the mining right which the minister could allocate to any other party.

The conversion granted by the minister in 2008 “stands until amended or set aside”.

“As a matter of law, at midnight on 30 April 2009, after AMSA failed to convert its undivided share of the old order mining right in respect of iron ore on the... properties, SIOC became the sole holder of the mining right in respect of those properties...,” the SCA held.

As a result of the dispute ,the SIOC and ICT brought criminal charges against each other, alleging various crimes.

A complaint was also laid against National Prosecuting Authority prosecutions head Glynnis Breytenbach by ICT, which claimed she was favouring the SIOC's Kumba mine lawyers in their case against the ICT.

The SCA said that SIOC operation was well-established as a mining operation, so it could not understand why the department of mineral resources had granted the ICT prospecting rights.

The criminal case still has to be finalised.

Kumba Iron Ore Limited said in a notice on the Stock Exchange News Service that in the interim, the sale of iron ore from the Sishen Mine to AMSA remained regulated in terms of the Interim Pricing Agreement concluded between the parties in December.

Mineral resources department spokeswoman Zingaphi Jakuja said the department noted the judgment and would study it with legal counsel, but would not comment further. - Sapa


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