Well-connected ICT to appeal Sishen mine ruling

2011-12-17 11:16

Judge Ray Zondo has probably knocked Imperial Crown Trading 289 (ICT), the company in which confidants of President Jacob Zuma are the leading players, out of the legal dispute over mineral rights in the rich Sishen mine.

On Thursday, Zondo ruled in one of the biggest and costliest court cases in the country’s history that Sishen Iron Ore (SIOC), the operating company of Kumba, was the exclusive holder of mineral rights for iron ore and quartzite on the land where the Sishen mine is situated today.

SIOC was the owner of a 100% mineral right in Sishen that the mineral resources department allocated to it in 2008. Until such time as this decision was set aside, no other party could be entitled to claim a mineral right on the property, Zondo said.

Any decision to accept other applications for mineral rights or to allocate mineral rights on the land are void from the beginning (ab initio), Zondo ruled.

This includes later applications by SIOC and ICT “for a prospecting right, mining right or mining permit in respect of a so-called 21.4% share”, according to the summary of the proceedings and court order that Zondo issued on Thursday.

On April 30 2009, SIOC made an application for the mineral rights on 21.4% that previously belonged to ArcelorMittal SA (Amsa). Four days later, ICT applied for the same rights.

Zondo also declared void the decision by Mineral Affairs Minister Susan Shabangu to grant prospecting rights on this 21.4% to Sishen.

He ordered that any notarial registration of the prospecting rights in the Mineral and Petroleum Rights Registration Office must be cancelled.

ICT legal representative Ronnie Mendelow said the company would early in the new year apply early for leave to appeal against the decision.

Zondo will only make the full judgment and reasons available on Tuesday, but in the shortened statement he left little doubt that he agreed with Amsa’s main arguments in this marathon case – that SIOC alone could apply for the full mineral rights because it owned and managed the mine.

Zondo said the short judgment set out the pillars of the reasons for the judgment. He said he had chosen to do it in this manner because he wanted to give due recognition to the enormous interest this case carried.

The judgment was clearly interpreted as a victory for Amsa. Amsa’s share price started rising after the judgment and closed the day 9.53% higher at R66 – the highest in the past month.

The judgment would have no immediate effect on the interim agreement between Amsa and Kumba, in terms of which Amsa paid $70 per ton for ore supplied to its inland plants and $50 per ton for ore supplied to Saldanha Steel. The agreement remains in force until the end of July.

Still, this improved Amsa’s chances of having its original agreement with Kumba to supply 6.25 million tons of iron ore per year at cost plus 3%, fully restored. It also meant Amsa could not apply for the rights that it owned earlier.

After the judgment, Amsa corporate affairs spokesperson Themba Hlengani said: “This confirms our view that SIOC is still bound to provide us with 6.25 million tons of iron ore at cost plus 3%.”

The dispute over the original provision agreement is being settled in a private case that would have been heard in May, but was postponed pending the litigation in the open court.

Former Kumba financial director Vincent Uren said he was glad ICT was disqualified by the court case, but was surprised at the decision that SIOC was the sole owner of 100% of the mineral rights in Sishen. “We will have to study the full judgment to understand the reasons for that.”

A spokesperson for the mineral resources department said they first wanted to study the full judgment before responding.

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