JOHANNESBURG, Aug 14 (Reuters) - Kumba Iron Ore on Saturday dismissed allegations by a former government official that it was manipulating the system to gain rights to a stake in one of its mines previously held by ArcelorMittal South Africa.
Former deputy director general at the Mining Ministry Jacinto Rocha said Kumba had applied for the mining right before ArcelorMittal's right expired, fuelling an ongoing dispute between Kumba and the South African unit of the world's largest steelmaker.
Kumba, the world's 10th largest producer of iron ore, terminated a preferential deal under which it sold ore to ArcelorMittal at a discount this year after ArcelorMittal failed to convert its mining right over a 21.4 percent stake in Kumba's Sishen mine.
A prospecting right over that same stake was later awarded to Imperial Crown Trading (ICT), which Kumba, a unit of Anglo American, is contesting in court, saying the government's decision was 'fundamentally flawed'.
ArcelorMittal's mining right was expiring on April 30 last year, and Rocha said Kumba launched its application the same day, asking officials to date it May 1, a public holiday.
Rocha, who was part of the team which later awarded the right to ICT, said Kumba did so to gain advantage over other applicants, as ICT applied for its prospecting right on May 4, the first working day after the expiry of ArcelorMittal's right.
'Kumba ... was manipulating the administrative system to gain advantage and gratification,' Rocha, now a mining law consultant, wrote in a commentary to media on the dispute.
'A few days before ArcelorMittal would have lost its old order mining right, Kumba had already been sharpening its knife to stub ArcelorMittal in the back. It was already in the process of pulling the rag under ArcelorMittal's feet.'
Kumba said the former official's allegations were 'incorrect and irrelevant'.
'At no stage did SIOC (Kumba's subsidiary) ever attempt to influence the process relating to its application for the mining right,' it said in a statement.
'At no time did SIOC ask for this application to be processed before May 1, 2009. The department of mineral resources has always acted on the basis that the application was properly lodged and processed as being received on 4 May 2009.'
ArcelorMittal is hoping to regain the long-term preferential deal, which is now in arbitration, by offering to buy ICT, but said it would cancel the acquisition should ICT's Sishen right be revoked.
The steelmaker last month reached an interim agreement to buy ore from Kumba over the next year at about half of recent market prices until the dispute is resolved.
ArcelorMittal was not immediately available for comment on Saturday.
(Reporting by Agnieszka Flak; Editing by Alison Williams) (For more Africa cover visit: http://af.reuters.com -- To comment on this story email: SouthAfrica.Newsroom@reuters.com) Keywords: KUMBA ARCELORMITTAL/ (agnieszka.flak@reuters.com; +27 11 775 3154; Reuters Messaging: agnieszka.flak.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Former deputy director general at the Mining Ministry Jacinto Rocha said Kumba had applied for the mining right before ArcelorMittal's right expired, fuelling an ongoing dispute between Kumba and the South African unit of the world's largest steelmaker.
Kumba, the world's 10th largest producer of iron ore, terminated a preferential deal under which it sold ore to ArcelorMittal at a discount this year after ArcelorMittal failed to convert its mining right over a 21.4 percent stake in Kumba's Sishen mine.
A prospecting right over that same stake was later awarded to Imperial Crown Trading (ICT), which Kumba, a unit of Anglo American, is contesting in court, saying the government's decision was 'fundamentally flawed'.
ArcelorMittal's mining right was expiring on April 30 last year, and Rocha said Kumba launched its application the same day, asking officials to date it May 1, a public holiday.
Rocha, who was part of the team which later awarded the right to ICT, said Kumba did so to gain advantage over other applicants, as ICT applied for its prospecting right on May 4, the first working day after the expiry of ArcelorMittal's right.
'Kumba ... was manipulating the administrative system to gain advantage and gratification,' Rocha, now a mining law consultant, wrote in a commentary to media on the dispute.
'A few days before ArcelorMittal would have lost its old order mining right, Kumba had already been sharpening its knife to stub ArcelorMittal in the back. It was already in the process of pulling the rag under ArcelorMittal's feet.'
Kumba said the former official's allegations were 'incorrect and irrelevant'.
'At no stage did SIOC (Kumba's subsidiary) ever attempt to influence the process relating to its application for the mining right,' it said in a statement.
'At no time did SIOC ask for this application to be processed before May 1, 2009. The department of mineral resources has always acted on the basis that the application was properly lodged and processed as being received on 4 May 2009.'
ArcelorMittal is hoping to regain the long-term preferential deal, which is now in arbitration, by offering to buy ICT, but said it would cancel the acquisition should ICT's Sishen right be revoked.
The steelmaker last month reached an interim agreement to buy ore from Kumba over the next year at about half of recent market prices until the dispute is resolved.
ArcelorMittal was not immediately available for comment on Saturday.
(Reporting by Agnieszka Flak; Editing by Alison Williams) (For more Africa cover visit: http://af.reuters.com -- To comment on this story email: SouthAfrica.Newsroom@reuters.com) Keywords: KUMBA ARCELORMITTAL/ (agnieszka.flak@reuters.com; +27 11 775 3154; Reuters Messaging: agnieszka.flak.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.