ArcelorMittal SA and Kumba reach deal on iron ore supply
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On July 22, the world's largest steelmaker ArcelorMittal's South African unit, ArcelorMittal South Africa (ArcelorMittal SA), announced that an interim arrangement has been reached with Sishen Iron Ore Company Limited (SIOC) of Kumba Iron Ore, in terms of a pricing agreement in respect of the supply of iron ore to ArcelorMittal's production facilities, following a long-standing dispute between the sides.
ArcelorMittal SA and SIOC have agreed a fixed iron ore price of $50/mt for lump material, for delivery to the Saldanha plant, and $70/mt for both lump and fine material delivered to ArcelorMittal's inland plants.
In line with the interim supply agreement, ArcelorMittal SA will continue to purchase the annual 6.25 million metric tons of iron ore under the standard payment terms, which is consistent with the disputed supply agreement. ArcelorMittal SA will continue to pay the transport costs.
According to ArcelorMittal's statement, there will be no escalation in the prices agreed for the duration of the interim period, which commenced from March 1, 2010 and will expire on July 31, 2011.
Any iron ore in addition to the maximum monthly amount will be purchased by ArcelorMittal SA at the then prevailing spot calculated EPP based price.
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