* Police says investigates allegations of fraud
* Raid relates to Kumba challenging ICT's mineral right
(Adds details, quotes, ministry)
By Agnieszka Flak and Ed Stoddard
JOHANNESBURG, July 27 Elite South African police
investigating possible fraudulent mining permits on Wednesday
raided the mines department and a company linked to a dispute
between one of the world's biggest mining companies and a unit
of steel giant ArcelorMittal.
McIntosh Polela, spokesman for the police Hawks unit, said
the raids centered on the government's mining department in
Pretoria and its regional offices in Kimberly, which oversees
minerals rights in Northern Cape province.
"It is alleged that certain individuals from the Department
of Mineral Resources were involved in fraudulent issuing of
prospecting rights," Polela said in a statement.
The police raid is the latest twist in a saga that has
dented investor confidence in the key sector.
Police also hit the offices of Imperial Crown Trading (ICT),
a little-known company with no experience in mining which has
become a household name in South African financial circles after
becoming embroiled in a dispute between the local unit of global
steel giant ArcelorMittal and Kumba Iron Ore ,
a subsidiary of mining giant Anglo American .
Polela said the operation followed criminal charges lodged
by Kumba, adding that the police seized documents which will be
used for further investigations.
"We are busy investigating charges of forgery, uttering,
corruption and fraud. In simple terms, these relate to among
others, falsifying of documents," he said.
The spat started when ArcelorMittal unit's mining rights at
Kumba's giant Sishen iron ore mine in the Northern Cape lapsed
in 2009 and ICT was awarded prospecting rights to the same piece
of land -- even though mining has been going on there for years.
Kumba had applied for mining rights over that same 21.4
percent stake to its Sishen mine it did not yet own. When the
right was awarded to ICT, the iron ore producer applied to court
to review the mining ministry's decision. The case will be heard
The Department of Mineral Resources confirmed the
investigation and said it was fully cooperating with police.
ArcelorMittal said in August in would buy ICT for 800
million rand ($120 million), effectively to gain control once
again of its lost slice of the mine and reinstate a lost
preferential iron ore supply agreement with Kumba.
The proposed acquisition sparked furious allegations of
corruption in the mining ministry because it also involved the
transfer of a quarter of the steel-maker's shares to black
investors, including ICT and an investment group led by the son
of President Jacob Zuma.
($1 = 6.681 South African Rand)
(Reporting Ed Stoddard, Ed Cropley and Agnieszka Flak; Editing
by Marius Bosch)