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South Africa to charge Kumba over mining right bid

Miners work underground at the Harmony Goldmine, near Carletonville, South Africa, in this Oct. 27, 2004 file photo.

Themba Hadebe/AP/Themba Hadebe/AP

South Africa's government will lay criminal charges against Kumba Iron Ore over its application for a mining right over the company's Sishen mine that it did not yet own, a lawyer for the minerals department said on Wednesday.

The state's move is the latest twist in a tale that has unnerved investors and led to allegations of graft and political favouritism in the resource-rich country.

Willie Vermeulen, a lawyer for the department of mineral resources, told the North Gauteng High Court in Pretoria that more details on the charges would be provided later.

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Vermeulen said Kumba had tried to manipulate the system to gain advantage by filing its application early, even before the previous holder's right had expired, and asking officials to change the date on its bid so it would be considered first.

"What is this other than a resolution to mislead?" he told the court.

A Kumba spokeswoman said the group – a unit of global miner Anglo American – would comment on the matter later.

Kumba has questioned the legality of a government decision to accept an application for the right from unlisted Imperial Crown Trading, which has ties to senior officials in the ruling African National Congress including President Jacob Zuma's son, and almost no experience in mining.

Last year it won the right to a 21.4 per cent stake in Kumba's Sishen iron ore mine in a decision that analysts said undermined the country's reputation and raised investor concerns over transparency and governance.

Kumba's allegations of fraud and corruption led last month to an unprecedented raid on the minerals ministry by a police investigative unit.

Disputes over mineral rights have highlighted transparency and governance issues in Africa's biggest economy after some had been awarded to people linked to high-ranking officials, sometimes over areas that were already being mined.

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The dispute in court lies at the heart of a battle between Kumba and the South African unit of steel giant ArcelorMittal , the previous owner of the Shishen right.

It could also further unnerve mining companies in the top producing country for platinum and ferrochrome and a major supplier of gold and iron ore.

Shares in Kumba were trading 0.24 per cent lower at 12:15 p.m. GMT after losing more than one per cent earlier. It underperformed a 0.43 per cent rise in the blue-chip top 40 index .

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