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Force majeure at Richards Bay Minerals is a wake-up call for SA

Leading to calls for a specialised police unit to curtail illegal mining and restore investor confidence.
Rio Tinto has suspended operations at Richards Bay Minerals over security concerns. Image: Supplied

Rio Tinto’s declaration of force majeure at its Richards Bay Minerals (RBM) sand mining operation last week following the murder of RBM’s operations GM Nico Swart in May and increasing threats of violence is a wake-up call for South African mining.

The Minerals Council of SA and the Democratic Alliance (DA) have called for urgent action to restore investor confidence. DA shadow mines minister James Lorimer has also demanded that a specialised police unit to crack down on mine invasions and zama-zama activity be set up urgently.

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Rio Tinto, the world’s second largest mining company, suspended operations at RBM last week and declared force majeure on customer contracts over mine security concerns.

R6.6bn project put on hold

Its $463 million (R6.6 billion) Zulti South expansion project to the south of Richards Bay has been put on hold while negotiations continue with government and law enforcement to address ongoing violence around RBM’s mining operations in the northern KwaZulu-Natal industrial port town.

The circumstances behind the latest shooting (of Swart) remain vague, though this is not the first incidence of violence in recent years against RBM or its employees.

Rio Tinto twice shuttered operations at RBM in 2019 over violent protests.

Mineral Resources and Energy Minister Gwede Mantashe visited the mine after the shooting to reassure Rio Tinto that everything possible was being done to resolve issues of violence around mining.

“The circumstances around the shooting are unknown at this stage and the incident is being investigated by the South African Police Service (SAPS). The company is cooperating fully with the SAPS to support its investigation into this very serious matter,” RBM reiterated in a statement.

The Minerals Council called on government to act swiftly to urgently restore law and order in the area.

“This requires urgent action by the national Justice, Crime Prevention and Security Cluster,” it said in a statement.

Mining industry at risk

The DA’s Lorimer says the ‘investability’ of SA’s mining industry is slipping away, and it’s time to set up a specialised police unit to stop lawlessness and mine invasions.

“Across the country mines are under siege from invaders or criminals trying to extract wealth. The declaration by RBM of force majeure on its customer contracts shows how bad the problem has become. RBM declared it was not able to meet its contracts because it has had to shut down due to ongoing attacks on the mine’s personnel and equipment.

“The mine has been under siege for years from local tribal leaders and militant groups who are demanding jobs, contracts and money,” says Lorimer.

Read:

The suspension of mining at RBM is a huge blow to KwaZulu-Natal. The mine is the largest taxpayer in the province, according to trade union United Association of South Africa (UASA), which called on the provincial government and police to restore order to the area.

This call has been echoed by the Minerals Council.

“Continued acts of lawlessness including blockages of roads, burning of equipment and intimidation of staff at mining operations are not only unacceptable and damaging to the country’s reputation as an investment destination, but also impact the lives and livelihoods of mining employees, their families and surrounding communities,” it says.

‘Severe socio-economic consequences’

“The closure of mining operations due to security concerns negatively impacts on production, employment and investment, and will ultimately have severe adverse economic and social consequences.”

Meanwhile, Lorimer points to the Nuco chrome mine in North West as one of several other mines subject to invasion.

Orion’s efforts to restart a copper and zinc project in the Northern Cape has also been met with protests from locals demanding deeper involvement with the community.

Read: Mining ‘mafia’ wants a piece of Prieska copper-zinc project in Northern Cape

“What’s significant about RBM is that it is the last remaining investment in South Africa of Rio Tinto, [one of] the world’s biggest mining companies,” says Lorimer.

“SA’s mining industry is desperate for foreign investment to maintain operations and open up new opportunities. The closure of an operation owned by Rio Tinto is going to chase away potential investors, worsening the decline of the industry.

“Potential investors, particularly in junior mining operations, will worry that if a company as big and experienced as Rio Tinto cannot make it in SA, that smaller operations will stand no chance,” says Lorimer.

“As mining revenues are a vital source of government funds, the government needs to be very attentive.

“Unfortunately, it has not been. Police have been very slow to act. Ordinary police are often bamboozled by legal counterclaims and regulatory loophole-jumping used by mining mafias. It is clearer than ever that South Africa needs a unit of police specialists, familiar with mining law and empowered to take on even heavily armed mining mafias.”

The creation of a specialised police unit was suggested in a Department of Mineral Resources and Energy (DMRE) discussion document on artisanal mining released in April. But recent events have added urgency to the industry’s call for action.

UASA says a local traditional leadership squabble is part of the dispute that gave rise to previous incidents of violence, which included the burning of mine equipment.

Nico Swart, RBM’s operations GM who was shot and killed in a hail of bullets in May. Image: Supplied

Peter Leon, global co-chair for Africa at Herbert Smith Freehills, says Rio Tinto’s decision to declare force majeure at RBM after Swart’s shooting should be a wake-up call for the DMRE.

“Rio Tinto is one of the world’s biggest mining companies and its decision to suspend operations at RBM is clearly concerning as much as it is not conducive to investor confidence in the country.

“I think there is a lot of sense in the proposal made by James Lorimer for the establishment of a specialised police unit to deal with illegal mining. This is something which the DMRE should be discussing urgently with the SAPS.”

“This issue is certainly not confined to KZN,” says Leon, “but is endemic to abandoned gold mines and tailings facilities in the Witwatersrand and Free state in particular.

“The minister now needs to follow his words at Richards Bay in May with concrete action before it is too late.”

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Just the presence of the ANC is sufficient reason to call force majuere.

I re-christen them ANCFM+

SA has been un investable for about 10 years now.
The situation has now become so bad that more and more companies are simply disinvesting and closing shop in SA.

The blame must be laid squarely at the door of the ANC.

Right….just how many “wake-up” calls do we still need?

Not only is disinvestment been happening for years now, the local funds are pouring out of SA in favour of more secure investment opportunities outside the borders of SA. This is a sad reality.

So Africa has arrived. Maybe Rio should investigate how these issues are dealt with on the rest of continent. They have never been much of a leader when the going gets tough. Are they asking for bids?

We live in a changed and lawlessnes society. The SAPS appears to lack skills of “strategic warfare ” against crminals . There is no pro-active thinking when it comes to instances like RMB and of late Nkandla where the roads should have been blocked days before the event. Its a cadre employment business and lacks competence . But what else can you expect from the ANC ? The future of SA is at stake and the ANC messes around like amateurs vs criminals

…the Zama Zamas are selling and its probable the buyer is the ANC

Racketeering comes in many guises

Although this is a sorry state of affairs I cant help but feeling a jolt of joy whenever I hear how the government digs it’s own grave. Their main priority is to remain in power. That’s it. Mantashe will do nothing. Saps are clueless . The main priority are the next polls and how to bamboozle the voters with outrageous promises. The more mistakes are made the better at this stage so that even the most ignorant of voters will eventually rebel.

me too….I will badmouth this ANC government and their cohorts till the end of days…..come to think of it there is actually nothing positive to say about CR and his party!

You cant wake a deaf, blind mafia like the ANC, several people rely on RBM for their daily bread not just the employees. As a resident of this city i have seen it fall faster than human waste down a long drop since its take over from the IFP. With the mayor sitting at Nkandla and supporting the criminals hosted there its no wonder RBM is in this situation at the moment.

And yet our large asset managers keep on telling investors not to panic and stay invested as the JSE is “cheap”. They are all shameless fake oriental carpet salesman in Istanbul Grand Bazaar!

Other companies doing business in Africa cannot also not rely on the police to protect their interests and hire private security companies. It is the cost of doing business. We must face reality that SA is just another African country. However we must write and fight, challenge and speak out against ineptitude whilst we still can. #VoetsekANC

In the future, the presence and influence of these illegal miners will grow. Just like in Zimbabwe, their activities will be legalised but not regulated. All their gold production will fuel the wealth of the political elite of SA and they will be protected.

Well the whole country is becoming a lawless septic hole filled to the brim with legalized thieves and their henchmen protected by the police.

Then you have a police minister and his commissioner that can not comprehend the most basic instructions from the Concourt?? If they are this uncapable how does Cyril not fire them on the spot. He is supposed to supervise and ensure these “people” do their work!!

The police is clearly protecting thugs and violent behavior is how you ensure they back off.

The ball is in Cyril’s court now. The police has shown they are supporting the violent thugs in SA. They should be removed TODAY should Cyril and his “party” want a shred of credibility to remain.

Fake Justice system

=

Fake democracy.

=

The country is run by violent thugs protected by the police starting with the mad hatter.

Somehow, our government should be able to see the importance of the biggest tax payer in KZN stopping operations and the role ‘government grants’ play in preventing hunger and keeping the government in power.

Where is the leadership in this country?

Where the amateur uses intimidation tactics to find a comfortable position in the arduous process of turning underground minerals into cash flow, the professional criminal uses the legislature.

The politically isolated small-time criminal uses a rifle and burn tires to intimidate and extort benefits from property owners. The sophisticated politically connected criminal uses the law, and the socialist politics of victimhood and redress, to secure a source of steady and easy cash flow from the same mining operation. One plunders from below the boardroom level, while the other plunders from above.

The unsophisticated small-time plunderer is vilified and called a zamma-zamma, construction mafia, state-capturer, and mining mafia while the sophisticated plunderer is glorified and called a BEE beneficiary.

The amateur who breaks the law does little damage to the economy compared to the professional who bastardized the law to legalize his acts of plunder. The law can act against the former, while the same law enforces and supports the legalized acts of plunder with the assistance of the judiciary and the police force.

Both these groups are plundering the same asset. Who has the moral authority to blame the other? The pot calling the kettle black. How does any society survive when plunder has been glorified and legalized? The president sets an example for everyone. He monetized his position of political power to becomes a billionaire. Now, everybody tries to monetize their little positions of power to earn an income.

“Sometimes the law defends plunder and participates in it. Thus the beneficiaries are spared the shame and danger that their acts would otherwise involve… But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them and gives it to the other persons to whom it doesn’t belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.” Frederic Bastiat “The Law”.

The tone deaf SA white corporations failed to study history and thought they can short circuit the inevitable that is,keep the barbarians at the door out by co-opting a few ANC leaders. Doing the right thing is worth so much and costs very little and after all it is better to give an inch than lose a mile.

cases like this one once again just shows how clueless and useless the current government + all law enforcements entities available to it, actually is – what they have not worked out to date is that the government is directly the looser in the game in terms of tax – just look at zama zama activities in old mines and nothing is done to it – does the anc also think this is also a type of job creation similar to their cadre employee idea??????
rsa’s assets can literally be looted, but currently it looks as if the government does not have the b_lls or the brains to address this issue while the taxpayer is the looser at the end of the day. we want, but we do not know how to get there, even with bee etc

The police are so weak and lazy that they can’t even arrest Zuma with his supporters around let alone deal with gangs in Cape Town that are more powerful than they are.

What are the chances that they are going to protect a company from illegal activity?

Clowns dressed in blue.

Clowns with nice salaries and pension funds for hardly any work done.

Social unrest and youth unemployment coming home to roost.

The strategy of the New Dawn was to appoint the world’s greatest tax collector and to let the rest go to hell.

Super genius.

Investor confidence in SA will NEVER be restored until the Zuptas are all in jail. The End.

I can imagine Nelson Mandela singing along to Lincoln Park: “We tried so hard and got so far
But in the end it doesn’t even matter…”

This would have been an ideal opportunity for the army to actually earn its keep for a change. Let them guard construction sites and mines, armed with sharp point ammunition and sufficient body bags.

Just to mention, cannot even imagine what Nico Swart’s family is going through right now and there were others previously. Only after this the money needs to be considered and the impact here is huge of which I am sure does even have to be explained to MW Readers.

Unemployment over 30% for 10 years, about 10 years in a low growth economic trap, and 14 years since load-shedding started and SA needs a wake-up call!!

yes, i s o following the wake-up call strategy, the anc always, but always follow the ostrich head in the sand strategy and somebody else / something else is to be blamed for their own pathetic state of incompetence in every sphere of the society – ironically they get paid as if they deliver top class work whilst nothing is actually done properly.

This useless, pusillanimous excuse for a government will do NOTHING about it, but Ramaphosa will be back at Davos waving the begging bowl and bemoaning the greed of the ‘rich’ nations.

SARS: mining revenue is higher than expected!
Comrades: hold my beer!

Just about every problem, not challenge, in this country could be fixed with a decent HONEST police force.

Shoot back with larger calibers and more weapons and DON’T stop until it makes Marikana look like a playground – drop these f%$#ng parasites including the Nkandla mob.

Hell and just think we did the first heart transplant. Where are we now? what a waste, thanks ANC!

End of comments.

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