As a result of the grant of the residual 21.4% undivided share, SIOC is now the sole and exclusive holder of the right to mine iron ore and quartzite at the Sishen mine. This residual mining right will be incorporated into the 78.6% Sishen mining right that SIOC successfully converted in 2009.
Themba Mkhwanazi, CEO of Kumba, said: 'Kumba welcomes the news of being awarded the residual right for the Sishen mine. As our track record shows clearly, Kumba is fully committed to transformation and will continue contributing towards the achievement of South Africa's developmental objectives. We appreciate the work of the Department of Mineral Resources in bringing this matter to a successful conclusion.'
The consent to amend SIOC's mining right, by the inclusion of the residual 21.4% undivided share, is subject to various conditions. The conditions, where applicable, will ultimately form part of the conditions to the Sishen mining right. These include the requirement for the continuation of the existing Export Parity Price ('EPP') based supply agreement between SIOC and ArcelorMittal SA Limited ('ArcelorMittal') in its role as a strategic South African steel producer, as well as SIOC's continued support of skills development, research and development and initiatives to enable preferential procurement.
Notes to editors:
The Constitutional Court ruled on 12 December 2013 that the residual 21.4% undivided share of the mining right in respect of SIOC's Sishen mine remained available for allocation by the DMR and that, based on the provisions of the Mineral and Petroleum Resources Development Act, only SIOC could apply to be granted the residual right. SIOC subsequently applied to the DMR in relation to the residual right.
The key terms of the supply agreement between Kumba and ArcelorMittal, as per the 6 November 2015 SENS announcement are as follows: The EPP will be calculated on the basis of an international index (the 'index price') and, at certain index price levels, ArcelorMittal will receive a discounted price, as follows: if the index price is between USD60/t and USD70/t, ArcelorMittal will receive a 5% discount to the EPP; between USD70/t and USD80/t, a 6.25% discount would apply and at an index price above USD80/t, a 7.5% discount would apply. If the index price is below USD60, ArcelorMittal will pay the EPP.
Centurion
13th October 2016