| State's intervention solves steel impasse - 2010/07/23 | |
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News Article: 5877 has been read 162 times. |
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| An 11th hour intervention by Trade and Industry Minister Rob Davies broke the logjam that threatened to plunge the local steel industry and the manufacturing sector into chaos and cost up to 4 000 jobs. The intervention saw Kumba Iron Ore and ArcelorMittal South Africa reaching an interim price agreement on the supply of iron ore to the steel maker from Kumba's Sishen mine. Kumba chief executive Chris Griffiths said the arbitration brought a quicker resolution although Kumba and ArcelorMittal SA would have eventually reached their own agreement. The dispute over the supply of iron ore from Sishen was discussed at the meetings of the boards of directors of the two companies on Wednesday, he said. After the meetings, Griffiths met Nonkululeko Nyembezi-Heita, the ArcelorMittal SA chief executive, and thrashed out the deal. Davies met with Kumba and ArcelorMittal SA bosses on Monday. Also in attendance were Economic Development Minister Ebrahim Patel and Mineral Resources Minister Susan Shabangu. The Department of Trade and Industry said it had noted the interim agreement and added that the ministers would meet in the near future with the parties to assess the impact of the settlement on long-term developmental objectives. "They will engage with the two companies to ensure that the settlement does not have a negative impact on steel prices in the short run and that in the long run the rents arising for South Africa's mineral resources are used to develop the economy." The interim agreement will be retrospective to March 1 and is valid until July 31 next year. ArcelorMittal SA will pay $50 (R372) a ton free of rail for iron ore to the Saldhana Steel mill and $70 a ton free of rail for ore delivered to its inland plants. There will be no price escalation during this period and ArcelorMittal SA may purchase a maximum monthly amount of 520 000 tons, including 125 000 tons at Saldanha. ArcelorMittal SA will also pay the Sishen Iron Ore Company the freight costs to transport the iron ore to Saldanha Bay, as it currently does, and will be responsible for transport arrangements at its cost to the inland plants. Nazmeera Moola, a director at Macquarie First South, said: "The interim pricing agreement seems sensible. It is a reasonable compromise. It is good for South Africa." The dispute arose over a contract under which the Sishen mine supplied iron ore to ArcelorMittal SA at cost plus 3 percent. When the steel maker failed to renew its 21.4 percent mining rights to the mine, Kumba said it would sell its iron to ArcelorMittal SA at market prices. The steel manufacturer disputed that the contract had ended because of its failure to renew its mining rights. By Wiseman Khuzwayo |
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| Source: Business Report | Date: 2010/07/23 |
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