17 May 2011 | Lindsay Clark
ArcelorMittal South Africa
(AMSA) is in
talks with a key supplier to extend an interim agreement set up to secure iron
Kumba Iron Ore and AMSA - part of the
world’s largest steel producer - are discussing extending the current interim
iron ore supply agreement, which expires in July.
The temporary agreement was
established in February 2010, when Kumba, part of mining group AngloAmerican,
announced its subsidiary - Sishen Iron Ore Company - would no longer supply
iron ore from its mine to AMSA at a cost plus 3 per cent price, but instead
planned to charge the steelmaker on commercial terms.
The interim deal was put in
place because AMSA had mineral rights to the mine in question. But Kumba claims
these have since expired.
A financial statement from
AMSA said an arbitration hearing with Kumba has been set for May 2012 and it
has now begun discussions to extend the current interim iron ore supply
agreement, which runs until July.
Meanwhile, AMSA has “entered
into an agreement which could lead to the acquisition of an iron ore resource
in the Northern Cape”. The company believes this could supply it with between 2
and 3 million tonnes of iron ore, if regulators approve the deal.
AMSA CEO Nonkululeko
Nyembezi-Heita said restocking was driving both international and local steel
markets, with a modest increase in underlying steel demand in the South African
mining and automotive industry. “There were encouraging signs of higher prices
and consumption was also up in emerging markets such as China and India.”
Nyembezi-Heita added that he
expected buyers in the domestic infrastructure sector to be active. “With South
Africa on the verge of another round of its infrastructure investment cycle led
by the power station build programme, transport and water systems, we are cautiously
optimistic about the months ahead."