NUMSA Statement on the ArcelorMittal and Imperial Crown Trading Looting Scheme

1. The National Union of Metalworkers of South Africa (Numsa) is dismayed, disgusted and shocked by what clearly appears to be a get-reach-quick scheme involving a so-called BEE consortium, Imperial Crown Trading (ICT) 289. The scheme, recently announced by ArcelorMittal, includes the buy-back for R800 million of the iron ore mineral rights previously allocated to ICT.

2. Numsa is aware that many allegations have been made regarding the allocation of mineral rights previously owned by ArcelorMittal by the Department of Mineral Resources (DMR) to ICT. This occurred after ArcelorMittal failed to comply with the mineral rights act and did not re-apply for the mineral rights on time. Allegations were then widely reported that ICT is a fake company with absolutely no capacity to mine iron ore. All that seemingly qualified them to earn the rights were their strong political links to key centres of political power.

3. Numsa rejects with contempt the dubious deal permitted by DMR. It seems that the deal was allowed and that millions will change hands, despite the fact that ICT appears to have possessed no capacity to utilize the rights it was granted.

4. A further question is how ICT is permitted to sell the rights back to ArcelorMittal without the direct involvement of the DMR?

5. If the department has in fact approved the deal, on what basis can it have done so, given the obvious atmosphere of corruption that surrounds it? DMR has a lot of explaining to do.

6. Numsa wants to put on record that when the Iscor was originally unbundled, government correctly stipulated two conditions: firstly, iron ore was to be supplied at a cheaper price to ArcelorMittal; secondly, ArcelorMittal should supply cheap steel to downstream industries to ensure that the value chain bolstered local manufacturing capability on the basis of the competitive advantage inherent in local mineral resources.

7. Numsa wants to put on record that Arcelor-Mittal has however abused its access to a cheap supply of iron ore by in return fixing import parity prices for steel in South Africa. It has shown absolutely no regard for government's original objective of making available cheaper steel to downstream industries to help build our own manufacturing base.

8. Numsa takes the view that it is incumbent on both Arcelor-Mittal and ICT to prove wrong, commonly held suspicions that this is a corrupt deal.

9. Arcelor-Mittal has concluded the deal with ICT despite being aware that Kumba resources had already embarked on court processes challenging the way in which rights were allocated to ICT. Given this, Numsa questions Arcelor-Mittal's sincerity and commitment to clean business practices. We get the impression that they are prepared to use their massive financial resources to pay off ICT and maintain their industry dominance at any cost.

10. That ICT is now included in Arcellor-Mittal's R9 billion ‘empowerment' deal, brings into question the whole process of allocating mineral rights and the framework government is using in adjudicating such processes.

11. The impression might also be created that, given ICT's manifest lack of capacity, they were co-opted from the start by Arcelor-Mittal to shore up its dominant position in the market.

12. By maintaining a monopoly position in the steel industry, Arcelor-Mittal limits access to affordable steel, slows down industrialization, and effectively sabotages government's industrial policy aims.

13. Numsa believes that ICT is not a credible company and doubts that criteria used by DMR in adjudicating allocation of mineral rights to it were bona fide. It seems likely that the two companies have colluded with each other and abused their financial muscle and political contacts to obtain mineral rights. These rights are the heritage of our people and we call on the DMR to conduct an investigation and explain what actually occurred.

14. Numsa further calls on the ANC, and the ANC government, to mandate the cabinet to intervene to reverse these seriously embarrassing deals. If they are allowed to stand, they can do the country no good. The image of BEE, intended as a critical progressive measure to deracialise the South African economy, could otherwise be permanently tarnished.

15. Unfortunately this latest Arcelor-Mittal-ICT looting scheme only raises broader questions about the political appropriateness of BEE measures.

16. Strategic resources of our economy should not be turned into a haven for profiteers and well-connected BEE parasites. They must instead be used to benefit the ordinary workers and poor of our country.

17. Arcelor-Mittal should be a strategic entity that helps drive industrial development and create jobs, alleviate poverty and provide opportunities for sustainable livelihoods for workers and the poor. 

18. We further call on the Cabinet to undertake a comprehensive review of all BEE deals. These should contribute to developing an industrial strategy as part of our overall developmental agenda.

19. We call on our own ANC government, as the custodian of all mineral rights on behalf of South Africa's people, to take back this 21, 4% shares that are manipulated by both ICT and Arcelor-Mittal and to use them to set up a state mining company as the resolved at the Polokwane conference. This could permit a supply of cheap steel to drive industrialization and boost manufacturing capacity.

20. We reiterate our call for the nationalization of Arcelor-Mittal and its return to the hands of the people as envisaged by the Freedom Charter, which unapologetically states that: ‘the people shall share in the country's wealth'.

Statement issued by Irvin Jim, NUMSA General Secretary, August 15 2010

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