July 25 2010 at 12:06PM Get IOL on your
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The government could be poised to intervene in a BEE deal worth several billions of rands at the Sishen Iron Ore mine that looks set to go horribly wrong.
With Anglo American component Kumba Mining and its subsidiary Sishen Iron Ore Mining already applying for a court review of the awarding of nearly a quarter of the prospecting rights at Sishen to a ANC-connected consortium, government mediators have indicated they will be revisiting the contract.
The reassessment will form part of an ongoing top-level mediation process, led by Trade and Industry Minister Rob Davies, in the troubled affairs of the iron and steel sector in South Africa.
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After Kumba refused to sell its ore at existing prices to AcelorMittal SA - the privatised heir of former parastatal Iscor - the government was forced to intervene to prevent the loss of thousands of jobs at Saldanha.
But sources close to the mediation told Independent Newspapers that, while the issue was not on the official agenda, informal guarantees were given that the controversial and allegedly irregular award of 21.4 percent of prospecting rights would be re-examined as it seeks to defuse the crisis.
At issue is a mega-contract awarded in March by the Department of Mineral Resources (formerly the Department of Minerals and Energy) to the unknown shelf company Imperial Crown Trading 289 (ICT). The contract was for 21.4 percent of prospecting rights to the Sishen iron ore mine.
Rights to actually extract the ore as well as the remainder of the area's prospecting rights continue to be held by Kumba and its subsidiaries, but the ICT slice of the cake could still yield billions of rands every year.
In the past month the long-simmering issue blew up when Kumba prevented ICT from accessing its claim.
Kumba's argument was that ICT had no locus standing as the matter was already before the courts. This followed Kumba lodgement of a court appeal against the process by which the ICT award was made. The Kumba paperwork cites among other anomalies that:
The ICT application paperwork was dated May 5, 2009, but the actual award of the prospecting rights was made the day before - on May 4 - that is to say before it was actually applied for.
The ICT application included, word for word, substantial portions of the text of the application submitted by Kumba for the same prospecting rights on May 4.
The awarding of the prospecting rights to ICT came without the DME responding to an earlier application - dated back to 2008 - by Kumba in respect of the same prospecting right.
The acknowledgement by the regional manager of DMR in Kimberly that the awarding of the contract to ICT was a mistake, and his commitment to correct the error - a commitment which was never implemented.