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Court mulls ruling on Sishen Iron Ore

5 Sep 2013

A high court ruling that effectively increased Sishen Iron Ore Company's rights in the Sishen Mine in the Northern Cape from 78.6% to 100% prevented the state from allowing new entrants into the mining fold, the Constitutional Court heard on Tuesday (3 September).

Jeremy Gauntlett SC, for the minister and the director-general of mineral resources, said the legislation did not permit the creation of rights that would be more extensive than those lodged for conversion. He said Sishen Iron Ore Company had applied to convert only its share.

The court has been asked to rule whether the minister of mineral resources had the power to grant a mining right to another applicant after the previous owner had failed to renew an old order mining right. The minister and Imperial Crown Trading are appealing against the March decision of the Supreme Court of Appeal, which ruled in favour of Sishen Iron Ore in the case involving the mining rights at the company's Sishen Mine.

The appeal court held that from April 2009, Sishen Iron Ore became the sole holder of the mining right to iron ore in the Sishen Mine, after ArcelorMittal SA failed to convert its 21.4% share of the old order mining right. The Supreme Court of Appeal also upheld a North Gauteng High Court ruling in 2010 that set aside the prospecting right granted by the Department of Mineral Resources to Imperial Crown Trading.

Mining rights

The Mineral and Petroleum Resources Development Act of 2002 required Sishen Iron Ore and ArcelorMittal SA to convert the old order mining rights into a mining right before the end of April 2009. While Sishen Iron Ore converted its share, ArcelorMittal SA did not.

Sishen Mine is one of the largest open-cast iron ore mines in the world and is said to account for almost 65% of SA's iron ore production.

In 2010, Sishen Iron Ore's parent company, Kumba, cancelled a nine-year deal it had with ArcelorMittal SA to supply it with iron ore at cost plus 3% and intended to force it to pay the prevailing market price after the latter failed to convert its mining rights in Sishen.

The arbitration proceedings relating to the disputed agreement have been stayed pending the finalisation of this case.

Imperial Crown Trading's counsel, Edmund Wessels, said if the old order mining right ceased to exist that shareholding became available to new applicants.

Chris Loxton SC, for Sishen Iron Ore, said his client managed to convert its 78.6% share in the mine. "One thing that must be clear is that upon secession of ArcelorMittal SA's old order mining right, Sishen became the only holder of the mining right."

The court reserved judgment.

Source: Business Day via I-Net Bridge

Source: I-Net Bridge

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