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Interim Supply Agreement Concluded Between ArcelorMittal South Africa and Kumba

07/23/2010 - ArcelorMittal and Sishen Iron Ore Co. Ltd. have agreed to a fixed price of $50 per tonne of iron ore for lump material, which is for delivery to the Saldanha plant, and $70 per tonne of iron ore for both lump and fine material delivered to ArcelorMittal’s inland plants.

ArcelorMittal has reached an interim arrangement with Sishen Iron Ore Co. Ltd. (SIOC) in terms of a pricing agreement regarding the supply of iron ore to ArcelorMittal’s production facilities.
 
ArcelorMittal and SIOC have agreed to a fixed price of $50 per tonne of iron ore for lump material, which is for delivery to the Saldanha plant, and $70 per tonne of iron ore for both lump and fine material delivered to ArcelorMittal’s inland plants.
 
ArcelorMittal will continue to purchase the annual 6.25 million tonnes of iron ore under the standard payment terms, which is consistent with the disputed supply agreement. ArcelorMittal will continue to pay the transport costs.
 
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 at the then prevailing spot calculated EPP based price.
 
“As a result of the conclusion of an interim agreement, we are pleased that we will be in a position to continue the Saldanha plant operations with the current employee complement that is in place,” said ArcelorMittal Chief Executive Officer, Nonkululeko Nyembezi-Heita. “Our current export order program will continue, but the viability thereof will depend largely on steel prices and exchange rate variations, which will be monitored on a continuous basis.”