Kumba Iron Ore would appeal the decision by the Department of Mineral Resources (DMR) to reject its application for mining rights over parts of the Sishen mine run by the company, the Anglo American subsidiary said yesterday.
If the appeal failed Kumba would take the matter to the high court, it said.
According to a letter sent to Kumba by the Department of Mineral Resources, the licensing committee which met on Monday rejected Kumba’s application for reasons including that it was “premature” and for the “irregular, misleading and fraudulent manner” in which it was submitted.
Kumba said the department did not provide Sishen Iron Ore Company (SIOC), owned by Kumba, with evidence to substantiate these allegations.
A Stock Exchange News Service statement issued by Kumba read: “SIOC will accordingly take the necessary steps to challenge the DMR rejection decision and protect the rights of the company and its shareholders, which actions will include an appeal against the rejection decision to the minister, and a possible high court review application if the appeal is not granted.”
SIOC has applied for an urgent interdict to stop the department from awarding the mining right to Imperial Crown Trading (ICT). It has been embroiled in a high court battle since May 2010 over the department’s decision in November 2009 to grant prospecting rights over Sishen to ICT.
The mining right previously belonged to ArcelorMittal South Africa, which failed to convert it to a new order right. Analysts say the spat between ArcelorMittal SA and Kumba has been highly politicised.
Former Kumba chairman Lazarus Zim last month resigned to avoid a conflict of interest as he is setting up a steel company to rival ArcelorMittal SA, which lost its right to cheap iron ore supplies from Sishen.
He had earlier excluded himself from board decisions over the Sishen deposit because of his relationship with Jagdish Parekh, ICT’s chief executive.
ICT would not comment on the rights questions as they were related to a legal process, Parekh said yesterday.
Abdul Davids from Kagiso Asset Management said: “We have personalities involved in this case, for example Zim and relatives of politicians in ICT.”
Davids said that if Kumba’s application was rejected, this might mean that ICT would be awarded the rights, and that ArcelorMittal SA “will yet again own the rights”.
Parekh, Duduzane Zuma, a son of President Jacob Zuma, and members of the Gupta family of India are part of a group acquiring a 26 percent stake in ArcelorMittal SA.
“The thing that I care about most is how does this reflect on the country as an investment destination, if it runs the full course,” Vestact investment manager Sasha Naryshkine said yesterday.
ArcelorMittal SA spokesman Themba Hlengani declined to comment, saying the dispute was between the government and Kumba.
A Kumba spokesman said yesterday that the new development had no impact on the continuing arbitration between Kumba and ArcelorMittal SA.
She added that Kumba was not worried about the impact of the decision by the department on ICT’s application.
ICT has the 21.4 percent prospecting right, and its application for mining rights has been accepted but not granted.
“It could take up to two years from acceptance for the rights to be awarded. It has taken 20 months for the DMR to reject the Kumba application.”
Department of Mineral Resources spokesman Zingaphi Jakuja declined to comment.
However, the department sent a statement late yesterday in which it said that it had filed an affidavit to Kumba and ICT responding to Kumba’s challenge of the department’s decision to grant ICT prospecting rights. The affidavit will be filed with the high court
.