Kumba, ArcelorMittal Agree to New Interim Price Model

By Devon Maylie

JOHANNESBURG--Kumba Iron Ore Ltd. (KIO.JO), South Africa's largest iron-ore producer, and ArcelorMittal South Africa Ltd. (ACL.JO) agreed to a temporary iron-ore pricing agreement Thursday while legal issues around a disputed mine play out.

Under the new agreement, which will run from January 2013 to the end of December 2013, Kumba will supply up to 4.8 million metric tons of iron ore to ArcelorMittal at a weighted average price of $65 a ton.

The new agreement is largely the same as the previous one, a spokeswoman for Kumba said, except ArcelorMittal now requires fewer tons of iron ore for the period.

Kumba used to supply iron ore, a key raw material in steel making, to ArcelorMittal at cost of production plus 3%. That agreement is being disputed, however, amid a court case over ownership of a minority stake in South Africa's largest iron-ore mine, Sishen.

At the end of last year South Africa's High Court ruled that Kumba, a subsidiary of Anglo American PLC (AAL.LN), was the full owner of Sishen after the Department of Mineral Resources awarded a 21.4% stake previously owned by ArcelorMittal to a small company called Imperial Crown Trading. A court will hear an appeal by Imperial and the mineral department in February.

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