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ARCELORMITTAL South Africa, a unit of the world's largest steel maker, said yesterday Kumba Iron Ore is still supplying it with iron ore at a discount, despite a dispute over prices.
Kumba, a unit of global miner Anglo American Plc, ended a deal in February in which it supplied the steel-making ingredient to ArcelorMittal South Africa at a preferential price.
"We are being billed at cost plus 3percent ... Kumba is also indicating what the differential is between the spot price, or market price and the cost plus 3percent," ArcelorMittal SA chief executive Nonkululeko Nyembezi-Heita said.
Analysts have estimated the steel firm's costs would rise to about R2billion a year if it has to source iron ore at market prices.
Kumba said it had served a claim on the steel firm in a bid to quicken the arbitration process it initiated, after ArcelorMittal SA disputed the new price.
Kumba invoiced ArcelorMittal SA for deliveries in March, asking the steel firm to pay the cost-plus price and the difference between the cost-plus price and the market related price into an escrow account pending the resolution of the dispute.
ArcelorMittal SA, which swung to a first quarter profit, forecast a robust performance in the second quarter of 2010 after posting a first quarter profit, but said the movements in the exchange rate for the rand versus the US dollar would have an impact on its performance.
The company posted a first quarter headline profit of R748million, due to improved trading conditions, compared with a loss of R237million a year ago.
ArcelorMittal SA said liquid steel production levels rose to 75percent of capacity compared with 55percent in the same period of 2009, while steel sales for the first quarter were 1,3million tonnes, 30percent higher than last year. - Reuters