Senegal wins international arbitration against ArcelorMittal

Senegal has won a long-running legal dispute with ArcelorMittal after a Paris arbitration tribunal ruled it could rescind a $2.2 billion deal signed with the steelmaking titan in 2007, a Senegalese government spokesman said Tuesday.

An ArcelorMittal spokesman confirmed the ruling.

Senegal sought to have the deal canceled after ArcelorMittal suspended work on a project to develop the Famele iron-ore mine in 2009.

"They simply said that the government of Senegal is freed from its engagements as regards ArcelorMittal, who did not respect their engagements—so there you have it," said Abdoulaye Latif Coulibaly, spokesman of the government of Senegal.

Mr. Latif Coulibaly said the damages were still being determined by the court, but said that Senegal had been seeking up to $750 million in relief.

ArcelorMittal "can confirm that the tribunal has now decided that Senegal is entitled to terminate the 2007 agreement, but that ArcelorMittal intends to vigorously defend against any claims made for damages in the second phase of the arbitration process," ArcelorMittal spokesman Tobin Postma said.

Phone calls to the International Court of Arbitration, which handled the case, weren't immediately returned.

The ruling paves the way for Senegal to begin negotiations with other companies to develop Famele, Mr. Latif Coulibaly said.

The world's largest steelmaker signed the $2.2 billion deal in 2007 with Senegal's government, according to a company news release from that time. In return for the concession to a 750 million ton reserve of iron ore in the deeply poor highlands of eastern Senegal, ArcelorMittal agreed to restore 750 kilometers of rail, stretching across the arid country, to a new deep sea port in the capital, Dakar, which the company agreed to build.

But in 2009, amid the global financial slowdown, ArcelorMittal suspended its Senegalese operations amid plummeting steel prices. The move prompted harsh words from Senegal's government—and took place against a backdrop of rising resource nationalism in Africa, where governments faced cash strains to build up roads and ports.

(Published by WSJ - September 11, 2013)