JOHANNESBURG (Business Day) -- Kumba Iron Ore [JSE:KMB], the group that emerged from the recent Kumba Resources restructuring, will take all legal action necessary to protect its contractual rights to the Fal'em'e iron ore deposit in Senegal, it said on Friday.
It was responding to a statement from global steel producer Arcelor Mittal [NYSE:MT], which said it would spend about $2.2 billion to develop an iron ore mine at Fal'em'e in a first step to creating a mining hub in west Africa.
In speaking to Classic Business Day, Kumba Iron Ore CEO Ras Myburgh said the company was caught by surprise with the news.
"It's unclear to us exactly what the situation is - other than the press statements from Mittal and what we've heard from the press in Senega," he added.
Kumba Resources CEO Con Fauconnier said a year ago it was investigating whether its rights had been infringed in Senegal after reports Mittal had signed a memorandum of understanding with the government development agency, Miferso, on the same property.
Myburgh said the company had already started the original pre-feasibility study and some of the work was done in late 2004. In 2005, some exploration drilling was done, but "very little activity has taken place early in this year."
Arcelor Mittal estimated reserves of about 750 million tonnes of haematite and magnetite deposits in four locations at Fal'em'e. It planned to start production in 2011 to produce between 15 and 25 million tonnes of iron ore a year.
The project would include building a new port at Dakar and about 750 kilometres of railway to link the site to the port. It would also make selected investments in downstream steel industries.
Myburgh said they had been engaged in negotiations with the Senegalese government up to a fortnight ago and had asked it for urgent clarification.
"We've been trying since early this morning to get clarity from the government on their position - unsuccessfully I might add. Obviously as soon as we've established their position and if it's confirmed that we are out of the project we will follow the legal options open to us," said Myburgh.
Asked if Kumba was aware Arcelor Mittal was exploring the same property, he said no one else had been working on the site and it was difficult to comment on how Arcelor Mittal was able to publish a definitive statement on the reserves there as Kumba had not published detailed information but had made presentations to the Senegalese government. With Classic Business Day.
