Constitutional court decision: Sishen Mine
12 December, 2013
Background:
Shareholders were advised on 28 March 2013 that the Supreme Court of Appeal (“SCA”) dismissed the appeals of the Department of Mineral Rights (“DMR”) and Imperial Crown Trading 289 (Pty) Ltd (“ICT”) against the decision of the North Gauteng High Court, which, inter alia, set aside the grant of a prospecting right to ICT by the DMR and held that Sishen Iron Ore Company (Pty) Ltd (“SIOC”) became the exclusive holder of the mining rights in respect of the Sishen mine in 2008 when the DMR converted SIOC’s old order mining rights. The SCA held that as a matter of law and as at midnight on 30 April 2009, SIOC became the sole holder of the mining right to iron ore in respect of the Sishen Mine, after ArcelorMittal South Africa Ltd (“AMSA”) failed to convert its undivided share of the old order mining right.
On 23 April 2013, shareholders were advised that both ICT and the DMR lodged applications for leave to appeal against the SCA to the Constitutional Court.
The Constitutional Court hearing was held on 3 September 2013.
Constitutional Court Decision:
On 12 December 2013, the Constitutional Court granted the DMR’s appeal in part against the SCA judgement. In a detailed judgement, the Constitutional Court clarified that SIOC, when it lodged its application for conversion of its old order right, converted only the right it held at that time (being a 78.6% undivided share in the Sishen mining right). The Constitutional Court further held that AMSA retained the right to lodge its old order right (21.4% undivided share) for conversion before midnight on 30 April 2009, but failed to do so. As a consequence of such failure by AMSA, the 21.4% undivided right remained available for allocation by the DMR.
The Constitutional Court ruled further that, based on the provisions of the Mineral and Petroleum Resources Development Act (“the MPRDA”), the opportunity to apply for the residual 21.4% undivided share of the Sishen mining right is open to SIOC only.
Shareholders have previously been advised that SIOC and AMSA have concluded a new agreement regulating the sale and purchase of iron ore to AMSA from SIOC’s mines with effect from 1 January 2014 and that this agreement settles various disputes between AMSA and SIOC. For more information, shareholders are referred to the joint announcement which was made on 5 November 2013.
Shareholders will be informed of any further material developments in this regard.