Troubles ahead for Indian steel giant Arcelor-Mittal and South Africa's Kumbra Iron Ore in the ongoing contractual dispute between the two companies.
The dispute is turning into an all out war between the South African steel industry and the Indian company.
Thousands of employees of mining projects will be affected with Kumba's announcement on Friday where it said that it would no longer supply ArcelorMittal iron ore until it was paid in full 48 hours in advance of delivery from Sishen Iron Ore Company (SIOC). SIOC is a Kumba subsidiary.
Months of negotiations led to a stalemate with Kumba demanding all outstanding dues for ore delivered between March 1 and July 31, 2010 from Arcelor-Mittal. The response from Arcelor-Mittal has been to initiate immediate closure of the Saldanha plant, cessation of all exports and a drastic reduction in domestic market production.
Saldanha Steel is a South African steel company which was originally formed as a partnership between Iscor Limited and the Industrial Development Corporation (IDC). Saldanha Steel is part of Mittal Steel South Africa which in turn is part of global steel company Arcelor-Mittal.
This announcement from Arcelor-Mittal will affect 3,000 to 4,000 jobs in the Western Cape region. The Department of Trade and Industry spokesperson Sidwell Medupe was trying to get an urgent meeting with both parties on Monday. The two companies have been negotiating over pricing for some time now with no consensus.