In a temporary truce between Kumba Iron Ore and ArcelorMittal, the world's largest steelmaker has agreed to buy ore from Kumba in the next year at about half of recent market prices. Kumba is a unit of Anglo American Plc.
The stop gap agreement brings relief to a bitter battle being fought since February this year. Shares of both companies reacted positively to the announcement on Thursday by rising sharply. The South African government's mediation has led to this interim solution while arbitration over the supply dispute continues.
The Trade and Industry Minister of the South African government, Rob Davies held the mediation talks with the companies earlier this week after concerns of the impact on the country's economy surfaced. The dispute would have cost the economy a number of jobs.
The new development is a marked improvement over the stance of both companies last week when Kumba wanted advance payments from ArcelorMittal for higher interim iron ore prices. While ArcelorMittal had begun proceedings to close down its Saldanha steel works.