Bloomberg News

ArcelorMittal, Kumba Extend Sishen Iron-Ore Deal to End of Year

August 23, 2012

Kumba Iron Ore Ltd. (KIO) agreed to extend a deal to supply ore from its Sishen mine to ArcelorMittal South Africa Ltd. (ACL) at below-market rates until the end of the year as the two companies try to resolve a dispute over pricing.

Sishen Iron Ore Co. will provide a maximum of 1.5 million metric tons to ArcelorMittal South Africa’s Newcastle and Vanderbijlpark units at $70 a ton and Saldanha Steel at $50 a ton through Dec. 31, Kumba said today in a statement. The 62 percent iron ore arriving at China’s Tianjin port, an industry benchmark, declined 1.6 percent to $104.70 a ton yesterday.

In March 2010, Centurion, Pretoria-based Kumba canceled a 2001 agreement to supply 6.25 million tons of ore a year from Sishen to ArcelorMittal South Africa, a unit of the world’s largest steelmaker, at cost plus 3 percent.

Kumba, a unit of Anglo American Plc (AAL), said it had lapsed because ArcelorMittal failed to renew its mining license for a portion of the deposit, an argument rejected by the steelmaker.

An interim supply accord reached in 2010 and extended in May last year expired on July 31. The companies are in talks on the terms of the supply after Dec. 31, with South Africa’s Department of Trade and Industry mediating.

“This supply is in settlement of ArcelorMittal South Africa’s historic shortfall entitlement,” Kumba said.

To contact the reporter on this story: Ana Monteiro in Johannesburg at amonteiro4@bloomberg.net

To contact the editor responsible for this story: Amanda Jordan at ajordan11@bloomberg.net


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