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Apr 19, 2010

Kumba wants iron-ore price difference to go into third-party account

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Engineering|Africa|Mining|Africa|Steel|Iron Ore|Iron-ore
Engineering|Africa|Mining|Africa|Steel|Iron Ore|Iron-ore
engineering|africa-company|mining|africa|steel|iron-ore|iron-ore-person
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JSE-listed iron-ore miner Kumba Iron Ore (KIO), which is involved in a dispute with ArcelorMittal South Africa (AMSA) over the cessation of a cost-plus-3% pricing arrangement it has with the JSE-listed steelmaker, wants the difference between the cost-plus price and the market price to be paid into a third-party account pending the resolution of the dispute.

KIO said on Monday that its subsidiary Sishen Iron Ore Company (SIOC) had continued to supply AMSA with iron-ore from the Sishen mine and had invoiced AMSA for the deliveries for the month of March.

KIO added, however, that it had requested AMSA to pay the cost-plus price directly to SIOC and to pay the difference between that price and the market-related price into an escrow account with a registered financial institution.

Furthermore, KIO said, SIOC had served a statement of claim on AMSA on April 19, in order to advance the arbitration process.

AMSA spokesperson Julian Gwillam told Engineering News Online that he could confirm that that AMSA had received the SIOC's statement of claim and that the company was in discussion on what its response would be, as this was an issue of materiality.

AMSA announced earlier that it would be imposing a R600/t or 10% surcharge on every ton of steel that it sold from May 1 to cover the cost to AMSA of the new higher iron-ore prices, which has incurred the wrath of the South African government and local steel consumers.

Both KIO and AMSA have said that they would like the dispute to be settled quickly, but no arbitration date had been announced at the time of going to press.

KIO reiterated that the cost-plus deal became inoperative in its entirely from May as a result of AMSA failing to convert its old-order mining right on the April 30 deadline.

The cost-plus agreement, concluded nine-years ago, was premised on the steelmaker owning an undivided 21,4% interest in the mineral right.

AMSA previously received 6,25-million tons of iron-ore a year at the special price.

 

Edited by: Creamer Media Reporter
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