ArcelorMittal South Africa, Kumba in talks over new supply deal

JOHANNESBURG Fri Sep 27, 2013 3:40am EDT

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JOHANNESBURG (Reuters) - ArcelorMittal South Africa (ACLJ.J) and Kumba Iron Ore (KIOJ.J) said on Friday they were in talks over a potential new ore supply agreement as the companies try to resolve a rights and pricing dispute spanning over three years.

The companies said the talks are for ore from Kumba's Sishen and Thabazimbi mines.

Kumba, a unit of Anglo American (AAL.L), had suspended an agreement with ArcelorMittal South Africa in February 2010 under which it sold iron ore at a discounted price of production costs.

The deal was in place because ArcelorMittal, a local arm of the global steelmaker (ISPA.AS), had a mining right in Kumba's Sishen mine that lapsed. The steelmaker said the discount supply agreement still stands.

The matter is in arbitration and the companies have reached an interim pricing deal pending the outcome of the hearing. The current agreement expires at the end of the year.

A Kumba spokeswoman said a new supply agreement could have an impact on whether the arbitration process goes ahead.

Shares in ArcelorMittal South Africa were up 1.2 percent in early trade in Johannesburg, above the 0.4 percent rise in the blue-chip index .JTOPI. Kumba was up 0.11 percent.

(Reporting by Olivia Kumwenda-Mtambo and David Dolan; Editing by Jon Herskovitz)

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