| Thu 22 Jul 2010, 8:00 | | KIO/ACL - Kumba Iron Ore /ArcelorMittal South Africa - Sishen Supply Agreement |
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ACL KIO
ACL KIO
KIO/ACL - Kumba Iron Ore /ArcelorMittal South Africa - Sishen Supply Agreement
Kumba Iron Ore Limited
A member of the Anglo American plc group
(Incorporated in the Republic of South Africa)
(Registration number 2005/015852/06)
JSE Share code: KIO
ISN: ZAE000085346
("Kumba")
ArcelorMittal South Africa Limited
(Incorporated in the Republic of South Africa)
Registration number: 1989/002164/06
Share code: ACL ISIN: ZAE000134961
("AMSA")
SISHEN SUPPLY AGREEMENT
Following mediation by the Department of Trade and Industry, Kumba and AMSA are
pleased to announce that Sishen Iron Ore Company (Pty) Ltd ("SIOC") and AMSA
have reached an interim pricing agreement ("the interim agreement") in respect
of the supply of iron ore to AMSA from the Sishen Mine on the following basis:
i) the duration of the interim agreement will be retrospective to 1 March 2010,
and will endure until 31 July 2011 ("the interim period").
ii) AMSA will pay to SIOC a fixed price of $50 per ton of iron ore (Lump
material) deliverable to AMSA`s Saldanha Steel plant (for use in the plant),
which price is calculated on an FOR ex Sishen mine gate basis, and $70 per ton
of iron ore (both Lump and Fine material), deliverable to AMSA`s inland plants
(for use in the plants), which price is calculated on an FOR ex Sishen mine gate
basis. It should be noted that there will be no escalation in the prices agreed
to for the duration of the interim period and that the timing and conditions
of payment will be historic terms.
iii) As it currently does, AMSA will pay to SIOC the freight costs to transport
the iron ore to the Saldanha Steel plant and will be responsible to arrange the
transport of the iron ore at its cost to its inland plants.
iv) AMSA will be entitled to purchase a maximum of 520 000t of iron ore from the
Sishen mine per month ("the maximum monthly amount"), in terms of the interim
agreement, on the basis of a Lump: Fine ratio of 73% / 27%. In respect of this
maximum monthly amount, deliveries to AMSA`s Saldanha Steel plant will be
limited to a maximum of 125 000t of iron ore per month.
v) Any iron ore not delivered to AMSA in a specific month as a result of
logistics constraints, will be available to AMSA after it has taken 520 000t per
month in each of August 2011, September 2011 and October 2011.
vi) Any iron ore in addition to the maximum monthly amount will be purchased by
AMSA at the then prevailing spot calculated EPP based price.
vii) The interim agreement will be definitive of the rights and obligations of
the parties regarding the sale of iron ore to AMSA from the Sishen mine during
the interim period.
This interim arrangement will allow the continuation of current operations at
the Saldanha Steel plant with the existing employee complement. AMSA`s export
order programme will continue with the viability thereof depending largely on
steel prices and exchange rate variations, which will be monitored on a
continuous basis.
Pretoria
22 July 2010
Sponsor to Kumba
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Sponsor to AMSA
Deutsche Securities (SA) (Proprietary) Limited
Date: 22/07/2010 08:00:04 Produced by the JSE SENS Department.
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