[miningmx.com] – RAPPROCHMENT was in the air after Kumba Iron Ore, an Anglo American subsidiary, and ArcelorMittal SA (AMSA) agreed to restart face-to-face talks on a broad-based, multi-mine iron ore supply agreement.
The resumption of discussions, sans the scaffold of arbitration, was confirmed in statements from the companies to the Johannesburg Stock Exchange this morning. The talks come with just over three months left before an interim supply agreement between the parties expires.
In terms of the interim supply agreement, which has been twice renewed, Kumba supplies 4.8 million tonnes of iron ore to AMSA at a weighted average price of $65/t.
This compares to an average internationally traded market price of $137/t during August. There has been a slight softening in the price during September to around $134/t.
Kumba Iron Ore said in its statement that the discussions would also involve iron ore from Thabazimbi as well as the much disputed Sishen Iron Ore Company (SIOC).
It’s unknown, however, whether the parties will include potential ore from Kumba’s Phoenix project – effectively an extension of the Thabazimbi mine which will close in 2018 – over which AMSA says it has rights, a claim disputed by Kumba.
“It’s early stages at the moment,” said Anne Dunn, a spokesperson for Kumba. “The important thing here is that the companies are sitting down. The legal and financial teams from both companies are talking face to face”.
“Pursuant to the objective of ensuring long term stability and security of iron ore supply for domestic use, shareholders are advised that the parties are engaging with one another in relation to the possibility of a new supply agreement for iron ore from SIOC’s mines including the Sishen and Thabazimbi mines,’ Kumba and AMSA said in near indentical statements.
The question of supplying AMSA iron ore was scheduled to go to arbitration once a decision had been made on litigation brought by Imperial Crown Trading (ICT) and the mineral resources department (DMR) on whether the former had rights over iron ore from SIOC.
Twice now the DMR and ICT have had their claims rebuffed in the courts, the last a Supreme Court decision in March in which ICT learned that a new order mining right over SIOC had been awarded exclusively to Kumba.
AMSA’s take on the matter is that the decision automatically grants it its share of discounted iron ore from the mine based on an historical agreement.
There’s still a final legal hurdle, however, as the matter has been brought by the DMR and ICT for a Constitutional Court ruling.
