Kumba Iron Ore's subsidiary, the Sishen Iron Ore Company (SIOC), is taking legal action on the granting of prospecting rights in Sishen Mine, SIOC said on Monday.

SIOC initiated a review application in the High Court in Pretoria on Friday.

The application was about a decision of the department of mineral resources (DMR) to grant a prospecting right to Imperial Crown Trading, the SIOC said in a statement.

It had made the application "in order to protect its interests".

The SIOC said its parent company Kumba had informed ArcelorMittal South Africa that as a result of Mittal's failure to convert its old order mining rights into new order mining rights, Mittal was no longer entitled to receive iron ore from SIOC at cost plus three percent.

The old order mining rights were in relation to an undivided 21.4 percent interest in the Sishen Mine.

Shareholders were advised on March 17 that as a result of Mittal's failure to convert the old order mining right, the SIOC had applied for a mining right for the residual 21.4 percent.

In February 2010, the SIOC was informed that an undivided prospecting right had been granted to Imperial Crown Trading 289 for the 21.4 percent of the Sishen Mine.

On March 1, the SIOC lodged an appeal with the DMR against the grant of the prospecting right to Imperial Crown Trading.

"This appeal process remains ongoing... SIOC has engaged with relevant stakeholders in relation to the grant of a prospecting right to Imperial Crown Trading and is continuing to do so."

However, the SIOC said it had now felt it necessary to initiate a review application in court on the matter.

"This review application does not detract from the SIOC's continued engagement with relevant stakeholders, with a view to finding an amicable resolution of this matter as soon as possible."

Imperial Crown's shareholders include Gugu Mtshali, while 50 percent is held by Jagdish Parekh, a key executive of the group of companies controlled by the Gupta brothers.