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Kumba Iron Ore and ArcelorMittal South Africa sign supply deal

Kumba Iron Ore, a subsidiary of miner Anglo American Plc, has signed an agreement with ArcelorMittal South Africa (AMSA) to supply 6.25mn metric tonnes of iron ore annually to the steel manufacturer

According to both companies, Kumba Iron Ore will sell iron ore procured from its Sishen and Thabazimbi mines in South Africa to AMSA at a price that includes the cost of production and a 20 per cent margin. The agreement will be effective from 1 January 2014.

“There is an agreed price for a pre-determined quantity of iron ore supply for the first two years of the agreement,” Kuma Iron Ore said.

AMSA was paying Kumba Iron Ore up to US$90 per tonne of ore in 2012, according to company sources.  

The deal paves way for Kumba Iron Ore to extend the life of the Thambazimbi mine, which currently has about three more years of productivity, the companies said.

Kumba Iron Ore chief executive officer Norman Mbazima said, “We are delighted to have reached agreement on a long term holistic solution that meets the requirements of both companies and is consistent with the government’s objectives.”

AMSA chief executive officer Nonkululeko Nyembezi-Heita added, “This is an exciting development that bodes well for us, in terms of long term security for supply of iron ore. Moreover, it will lend stability to the steel industry in South Africa.”