AFRICAN Rainbow Minerals (ARM) plans to seek “redress” for serious breaches it alleges Assore committed in its role as sole marketing agent for Assmang, the joint venture the two companies share.
This is a central part of a counterclaim ARM plans to file in response to the High Court suit Assore brought against it earlier this month.
In its filing to the High Court, Assore says ARM overstepped its powers by making decisions on senior management appointments at Assmang without going through Assmang’s executive committee. ARM contends that it has management control of Assmang.
At the heart of the matter is a dispute over the interpretation of the shareholders’ agreement the parties signed in 2005. According to Assore, the agreement makes ARM an independent contractor providing mining and financial services, but not a manager.
ARM sees things differently. Based on legal advice received, Assore’s claims and allegations "have no foundation or substantive merit" it said. "The authority of Assmang’s exco has not been undermined. ARM, as manager of Assmang, is entitled to make senior management changes at Assmang," it added.
In addition, ARM is questioning Assore’s activities as Assmang’s sole marketing agent under the agreement.
As operator, ARM earns a management fee, which Assmang books as a cost along with its other costs; ARM then takes 50% of Assmang’s profits. As marketing agent, Assore has the exclusive right to sell Assmang’s ore, which it does through its subsidiary, Ore & Metal. Ore & Metal earns an agreed commission on sales, and Assore takes the other 50% of profits.
But it is at the Ore & Metal level that ARM’s push for “redress” may fit in.
In a statement to Miningmx, ARM confirmed it intended to defend Assore’s High Court suit and to bring counterclaims of its own, including, it said, “... claims to redress harm caused to Assmang by material breaches by Assore of the agreement in terms of which Assore is the sole agent for the sale of Assmang’s products”.
It is unclear from ARM’s statement what those breaches might be. They are unlikely to involve transfer pricing, a practice in which, applied to mining, a company sells its output to a related entity in a different jurisdiction to benefit from differences in tax. That is because Ore & Metal is a local company, said Assore CEO Charles Walters.
“What I would say on transfer pricing is that it’s not relevant. Ore & Metal, the agent that receives the commission from Assmang, is a local company. So there is no transfer pricing between Assmang and Ore & Metal,” said Walters.
However, ARM has pressed Assore for more tax information about Ore & Metal, without which, it claims, it cannot submit Assmang’s tax return for the 2025 financial year. This is the second main limb of the dispute between the companies.
In its court papers, Assore claims ARM’s requests about Ore & Metal’s accounts far exceed anything asked for in any previous year since 2005. In any event, Assmang’s accounts for the year were audited.
“We are an agent for Assmang,” said Walters. “We act for and on behalf of Assmang. The contracts are in Assmang’s name, and those source documents are available to them in a SharePoint library – the discounts, the prices, the freight. Everything is transparently in source documents in front of them.”
ARM said it had filed preliminary objections to aspects of the Assore summons. "Once these are resolved ARM will file its plea (statement of defence) and counterclaims. This is not likely to occur until next year," it said.
ARM's share of profits from Assmang in its 2026 financial year ended June fell 27% to R2.4bn from R3.3bn previously owing to a stronger rand, which hurt iron ore profits, while a decline in the manganese price also weighed heavily.