Kumba Loses Appeal Over Sishen Stake
The country’s largest iron-ore producer, Kumba, is left with the courts as its only recourse to contest the Department of Mineral Resources’ decision to grant Imperial a right to prospect for iron ore and manganese at the mine which is owned by Kumba, Exxaro Resources and other empowerment shareholders.
Ms Shabangu said that she made her decision based on the law as it stands and not under the changes that her department envisions making.
“I’ve upheld the decisions of the regional manager and the deputy director-general to award Imperial the prospecting right,” Ms Shabangu said yesterday.
Ms Shabangu said her decisions were prescribed by law and she could not deviate to account for her personal views.
The decision took five months to make and involved taking legal opinion. “I’ve satisfied myself the decision made by my officials was the right one,” she said.
She rejected any notion that the award of the right was made because of the political connections of Imperial’s shareholders.
“Our responsibility is to look at the application. If it’s compliant then we are compelled to grant a licence, not on the basis of those individuals,” she said.
“It has nothing to do with being politically connected.
“We’ve rejected many, many people who have political affiliations and who have made applications to this department. They cry and complain, but if they cannot comply with the law we can’t treat them differently.
“If you want to come into this industry you must be serious. You cannot come in because you are a comrade. You can’t operate this country on the basis of comradeship,” she said.
Urgent amendments to the Mineral and Petroleum Resources Development Act are due before the end of the year to plug gaps and clarify points of ambiguity that have been exploited by smaller companies, which have applied for rights over properties where larger companies may have interpreted the act differently to the way the department did.
This is not the case with Imperial and Sishen. ArcelorMittal SA did not convert its 21,4% stake in the Sishen mine to a new- order mining right by April last year and it reverted to the state, clearing the way for someone else to apply for it.
Imperial filed a prospecting right application and Kumba applied for a mining right over the 21,4% stake, both on May 4 last year. The department, following the letter of the law, awarded Imperial the right because it is black-owned.
Kumba appealed against the decision, with CEO Chris Griffith pointing out irregularities in the Imperial application and arguing that the department erred in accepting it. “The minister noted that only a competent court is able to review the decision regarding the award of the rights to Imperial,” Kumba said yesterday, adding that it started a high court process in May this year.
Mittal has made an R800m bid for Imperial if it is able to convert its right to a mining right.
The department, which is fiercely critical of empowerment companies “flipping” their rights, or selling them without adding value, will take a close look at the Mittal deal as it has to approve it.
A decision on an appeal by Lonmin, the world’s third-largest platinum miner, against the awarding of a prospecting right for base metals over part of its Marikana mining property to Keysha Investments 220 could be made before the end of the month, Ms Shabangu said.
Johannesburg, Aug 18, 2010 (Business Day/All Africa Global Media) source tradingmarkets.com