Bloomberg cited Mr Imara SP Reid Head of Research Stephen Meintjes as saying that Kumba Iron Ore Ltd will likely have to reinstate an agreement to sell 6.25 million tonnes a year of iron ore to ArcelorMittal South Africa Ltd at cost plus 3%.

According to the ruling a Pretoria High Court last month ruled that Kumba Sishen Iron Ore Co unit was awarded a 100% right to the Sishen mine based on new legislation that came into force in 2004. ArcelorMittal was therefore not legally able to renew its minority right over the property. Kumba had argued that because ArcelorMittal failed to renew the right, the supply agreement lapsed.

Johannesburg based Meintjes wrote in a research report that the finding undermines the basis for Kumba cancelation of the cost plus 3% iron ore supply arrangement installed.

Meintjes maintained a “hold” rating on both companies.

(Sourced from Bloomberg)