Yesterday, Kumba Iron Ore indicated that its agreement with Mittal on the supply of iron ore from the Sishen mine had become inoperative as of May 1 2009.

The deal was concluded in 2001 and premised on Mittal owning an undivided 21.4% interest in the mineral rights to iron ore.

The deal had become inoperative as a result of Mittal's failure to convert its old order mining right, according to Kumba Iron Ore.

Kumba said Sishen had, in the interim, tendered to supply iron ore to Mittal at market related prices. Sishen had continued to supply Mittal with iron ore from the Sishen mine and had recently invoiced Mittal for the deliveries for the month of March, Kumba said.

Furthermore, Sishen had requested Mittal to pay the cost-plus price directly to it and the difference between the cost-plus price and the market related price into an escrow account - pending the finalisation of the dispute.

In February, Sishen received confirmation that Mittal had failed to apply to convert its mining rights of 21.4% in the Sishen mine.

Sishen then notified Mittal it would no longer supply iron ore at cost plus 3%, but at market related prices.