Board Deliberations
29 June, 2010
In response to media reports, Kumba wishes to confirm that its board decisions with regard to the mining rights, have received unanimous support from the Kumba and SIOC board members, management and major shareholder, Anglo American. In coming to decisions the boards have taken into account a wide variety of views and have debated all issues thoroughly.
There has been no disagreement or division in regard to the decision to launch the High Court Review of the mineral rights awarded to ICT.
It has always been Kumba's preference to secure the residual 21.4% rights through engagement and through the internal DMR processes. It was for that purpose that Kumba launched the internal appeal in March 2010. In addition, where possible, appropriate opportunities have been taken by Kumba, SIOC and Anglo American representatives to have discussions with relevant stakeholders in the SA Government, to try to achieve the same outcome for SIOC without having to resort to legal processes. These engagement efforts continue.
Mr Lazarus Zim, as chairman of Kumba Iron Ore, declared to the Kumba management team and board, that he had become aware that certain parties involved with ICT are associated independently with his interests and shareholdings in other entities. Due his association with Mr Parekh, a shareholder of ICT, Mr Zim has, on three occasions, offered to recuse himself from discussions regarding the mineral rights dispute in the Kumba board meetings. The board agreed at the time that there was no conflict of interest as Mr Zim was not involved in ICT or its application for the 21.4% residual rights. As Mr Zim brought significant experience and wisdom to the deliberations, the board declined his offers to recuse himself. However, as a result of a number of media articles and perceptions of conflict, it was announced on Friday, 25 June 2010, that "the Chairman considers that, as a matter of principle, and for the avoidance of doubt as to the integrity of the processes that are currently underway, it is in the best interests of the company and its shareholders that he recuse himself from these processes with immediate effect." The board is pleased that Mr Zim will continue to serve as chairman and to lead all other board matters. Kumba has a strong competent board, supported by a focussed management team and advisers. The board will elect an acting chairman for deliberations on the mining right issues.
MINING RIGHTS AND THE DMR REVIEW
Since 15 May 2009, when SIOC learned of a competing application for the 21.4% residual rights the company has lodged an objection and two appeals with the DMR, all of which currently remain outstanding. On 21 May 2010, in order to protect its legal position and to prevent prescription, SIOC launched a High Court Review of the decision of the DMR to grant a prospecting right to Imperial Crown Trading. In terms of the Promotion of Administrative Justice Act (PAJA) there is prescription of the right to launch a Review, which has to be instituted without delay and within 180 days of becoming aware of the relevant decision. SIOC had previously informed relevant stakeholders of the requirement to do so. No court date has yet been set for the Review. All these legal challenges are made possible by the MPRDA and PAJA, enabling affected parties to seek redress.
If, in the period before the Review is actually heard in court, the DMR overturns the award of the rights to ICT and awards them to SIOC, there will be no need for a court case to decide the matter. As was mentioned in the SENS announcement of 24 May 2010, "this Review application does not detract from SIOC's continued engagement with relevant stakeholders, with a view to finding an amicable resolution of this matter as soon as possible."
To protect the integrity of the legal process and the good faith nature of Kumba's engagement with stakeholders, Kumba has preferred that the Review application is made available to interested third parties through public sources only and not from Kumba itself.
ICT
Kumba has had a single fact finding meeting with ICT to establish the ownership and intentions of that company. No further engagements are planned. SIOC has subsequently received a letter from ICT's attorneys requesting a meeting regarding ICT's intention to start prospecting. SIOC's legal advisers have responded that the company will not provide access to the Sishen property in the light of the pending Review application, in which ICT is a respondent, and due to significant adverse operational, health and safety implications for SIOC and its employees. If ICT attempts to start prospecting, SIOC will apply for an urgent interdict to stop it from doing so. SIOC's legal advisers are awaiting a response from ICT's attorneys.
ARCELORMITTAL
On 19 April 2010, SIOC initiated the arbitration process (declaring the Sishen supply agreement inoperative) by serving its Statement of Claim on ArcelorMittal. SIOC also nominated its arbitrator. ArcelorMittal has yet to nominate its arbitrator and to respond to SIOC with answering documents.
SIOC and ArcelorMittal are currently in negotiations to reach an agreement with regard to the pricing of iron ore supplies to ArcelorMittal in the interim period commencing 1 March 2010 until the finalisation of the arbitration. As indicated in the SENS announcement of 4 May 2010, "SIOC has advised ArcelorMittal that should the parties not come to a firm agreement on an interim pricing mechanism in the near future, SIOC will review the basis upon which it will continue to supply iron ore to ArcelorMittal."
Issued by Brunswick on behalf of Kumba Iron Ore
Contact: Anne Dunn 082 448 2684
011 502 7404