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Sishen mining rights wrangle takes new turn
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Nick Wilson
Business Day
Wednesday, March 24, 2010
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The battle between Kumba Iron Ore and ArcelorMittal SA over the 21,4% of the rights in the Sishen mine has taken an unexpected turn with the news that the rights have been allocated by the Department of Mineral Resources to a previously unknown close corporation, Imperial Crown Trading (ICT), which has some political middleweights on its board.
This now opens a new dispute, this time not between Kumba and ArcelorMittal, but between Kumba and the department.
The department claims it acted entirely legally. Department director-general Sandile Nogxina relies on a clause in the relevant legislation, which states that if two applications are submitted, preference must be given to historically disadvantaged persons.
Kumba has questioned this decision, despite being only 26% empowered compared to ICT being apparently more empowered, in the sense that at least ICT’s directors all appear to be black. The question is on what basis then can Kumba complain?
According to a Macquarie Securities note to clients, the likely basis for contesting the decision is that this stipulation does not apply if the parties have applied for different kinds of rights.
In this instance, ICT has applied for a prospecting right, whereas Kumba has applied for a mining right, the note suggests.
Given that the ground has been mined for the past 30 or so years and that Kumba complies with black economic empowerment requirements, and has a mine’s work programme in place, “one has to question the merit and justification for the need to issue a prospecting permit”, it states.
The department is considering its position.
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