Court rules in favour of Sishen over rights

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Johannesburg - Kumba Iron Ore has won a lengthy legal battle over the mining right at its Sishen mine that had been held by ArcelorMittal South Africa after the Constitutional Court ruled in its favour yesterday.

Kumba unit Sishen Iron Ore Company was the only party competent to apply for and be granted the mining right in terms of the Mineral and Petroleum Resources Development Act (MPRDA), the court found.

The court gave Sishen three months in which to apply for the new order mining right at the Northern Cape mine.

The ruling was extremely positive for South Africa’s rule of law, experts said yesterday.

“Of great importance in the court’s judgment is the reaffirmation of the key principle of security of tenure in the South African mineral regulatory system,” Webber Wentzel mining sector group head Peter Leon said yesterday.

In addition, ArcelorMittal SA is liable to pay half the legal costs of the Mineral Resources Department and Sishen.

Imperial Crown Trading (ICT), which had initially been granted rights at the mine, must also pay towards the legal costs of the State and Sishen.

Both ArcelorMittal SA and Kumba, an Anglo American subsidiary, said they were studying the ruling, and the judgment would not affect the new supply agreement that they reached last month.

ICT is also studying the judgment. Its lawyer, Ronnie Mendelow, said “the matter is multifaceted and a great deal of engagement between all parties will take place”.

Meanwhile, soon after the judgment, Kumba said it aimed to restore the Sishen mine to output capacity of 37 million tons a year by 2016 and to sustain production at its Kolomela mine at 10 million tons a year, 11 percent more than the mine’s original design capacity.

The pit at Sishen is constrained due to inadequate waste stripping, resulting in insufficient exposed ore. The company plans to change the way it mines at Sishen.

To allow for Sishen’s expansion, Kumba said it would relocate the Dingleton community in the Northern Cape.

In terms of the MPRDA, holders of old order mining rights under the previous act were required to convert them into new order mining rights by April 30, 2009.

Sishen held 78.6 percent and ArcelorMittal SA held 21.4 percent, which underpinned an iron ore supply agreement.

Sishen converted its share of the right, but ArcelorMittal SA failed to do so before the deadline, so its right expired.

The dispute arose when the Mineral Resources Department awarded a prospecting right to the mine to ICT, and rejected Sishen’s application for the 21.4 percent right.

Sishen approached the North Gauteng High Court to review and set aside the granting of the right to ICT, which was politically well connected.

Mineral Resources Minister Susan Shabangu and ICT had argued that the granting of the right was in line with transformation imperatives.

The high court set aside ICT’s right in 2011. Its ruling was upheld by the Supreme Court of Appeal in March. - Business Report


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