BUSINESS MAVERICK

Billions of rand lost as Richards Bay Minerals shutdown approaches three weeks

By Justin Brown 19 December 2019

A worker tapping titanium as it comes out of a furnace at the Richards Bay Minerals smelter near Richards Bay in KwaZulu-Natal.

RBM remains shut and there are no signs of any imminent move by the company to reopen its doors.

Rio Tinto, Richards Bay Minerals’ (RBM’s) controlling shareholder with a 74% stake, shut its operations on Wednesday 4 December for an indefinite period after two weeks of community violence related to a tribal dispute that threatened the safety of the mine’s staff and contractors. On Wednesday 18 December the closure entered its third week.

In a previous disruption, the company suspended production in 2018 after a fatality and labour disturbance at RBM, according to Rio Tinto’s 2018 annual report. That suspension resulted in a $132-million (R1.9-billion) loss in income for RBM.

The latest closure is causing lost income for the company, its employees, the contracting company and its employees, the wider Richards Bay community and the national fiscus.

It looks as though RBM will remain shut until next year, which means the plant could remain closed for at least a month, sources close to RBM said.

On the other hand, Zanele Zungu, a company spokesperson, said RBM had not decided to shut for the rest of 2019.

Last week, KwaZulu-Natal Premier Sihle Zikalala visited RBM and met mine management, local Mbuyazi tribal authorities, unions, and other stakeholders to try to resolve the impasse and get the company back to work.

Earlier this month, the Federation of Unions of South Africa called on Minister of Minerals and Energy Resources Gwede Mantashe to intervene. However, Zikalala appears to be the person to represent the government in resolving the RBM violence.

At a media conference last week, Zikalala said he was worried that the recent developments at RBM would result in the KwaMbonambi area developing a reputation as “a violent, unsafe, unstable area for business to operate”.

Zikalala made this statement in a video posted on the KwaZulu-Natal Provincial Government Twitter page.

He said the provincial government would assist RBM, including helping with improving security near the mine by having South African Police Service staff in the area and providing escorts for the vehicles that transport RBM staff.

We will be working with [government] intelligence to ensure we gather more information about what informed these criminal activities. Who is behind that? Then we will deal with that in terms of the law,” he said.

Zikalala said RBM was “an important economic player not just for the province but the country as a whole”.

Its direct annual economic contribution is over R6.2-billion, and there is also much indirect contribution that comes with that,” he said.

Rio Tinto estimated RBM’s net book value at $474-million (R6.8-billion) at the end of December 2018.

RBM was KwaZulu-Natal’s most significant taxpayer, Zikalala said, thus adding to the urgency of the situation.

We believe soon they will start to go back to work… [From the week starting December 16] they should be back at work,” he said.

However, RBM remains shut, and there are no signs of any imminent move by the company to reopen its doors.

RBM operates on tribal land belonging to the Mbuyazi clan, which has faced a leadership battle for many years. Discontent about how R74.5-million in funding from RBM was divided among the Mbuyazi community members was another element fomenting tribal unrest, City Press reported this month. RBM handed over that money in May 2018.

In a further escalation of the tribal violence that might delay RBM’s reopening, on Wednesday 11 December, Meshack Mbuyazi, a leader of one of the factions in the Mbuyazi clan, was shot dead while getting into his car after meeting Zikalala, according to the Mail & Guardian.

Daily Maverick has pictures of a white Mercedes, riddled with bullet holes, that Mbuyazi was driving.

The windscreen in front of the driver’s seat of the car has eight bullet holes, the side window next to the driver’s seat has nine bullet holes, and one bullet penetrated the passenger window behind the driver’s seat.

In a note to RBM staff on Friday 13 December the company said that “safety is our priority and we will only restart once we have confidence in the safety of our workforce”.

The Mail & Guardian quoted Zikalala’s spokesperson, Lennox Mabaso, as saying that Zikalala would hold an urgent meeting with the community on Sunday 15 December to try to restore calm in the area.

RBM told its staff that it would be “monitoring the proceedings closely” regarding Zikalala’s latest meeting.

Mabaso didn’t return calls from Daily Maverick seeking comment about the meeting.

In a note to RBM staff, Werner Duvenhage, RBM MD, said on 13 December:

“My heart is at pain due to where we are as a business. Two of our team members have been injured through gunshots… I certainly do not want this to happen to anyone else. That is why we want to make sure that conditions are safe before we fully restart our business.”

Thulani Radebe, an RBM employee, was hit by a bullet when a gunman fired a shot at a company bus. He ended up in hospital as a result. In another act of violence, a contract worker was injured.

Most RBM employees have been on compulsory leave since 4 December and during this time employees have had to use their annual leave, while up to five days were given to employees “without enough leave”.

Due to the closure of RBM for more than five days, an increasing number of RBM staff would now be on unpaid leave.

How do you buy food? How do you pay your bills? It is terrible,” a source close to RBM said.

Muzikayise Zakwe, National Union of Mineworkers (NUM) KwaZulu-Natal regional secretary, said that to resolve the impasse a community imbizo was to be held soon.

On December 13, the NUM staged a march to the RBM offices to hand over a memorandum addressed to the company, Zikalala, the Department of Labour and the Department of Mineral and Energy Resources.

NUM said in the memorandum that it was “extremely worried” about the ongoing roadblocks, ambush attacks aimed at RBM workers, the instability in the area, and the decision by RBM to not pay employees, who have no annual leave left, during the shutdown.

Recent events had the potential to result in job losses, the union said.

RMB’s Zungu said in reply to questions that the company had about 1,900 permanent employees and approximately 2,000 workers on site that are employed by contracting companies.

However, Duvenhage said during an interview with eNCA earlier this month that 5,000 jobs were at risk at the company.

NUM accused RBM and Zikalala of being slow to respond to community violence.

RBM needed to be more proactive in dealing with the situation, the union said.

We… demand that the office of the premier must come up with a strategy that will ensure that we preserve what we have in terms of current mining investment in the province,” NUM said in the memorandum.

We demand safety to all workers, and we further demand speedy resolutions to all disputes that have been escalated to the office of the premier.”

NUM said that Rio Tinto changed RBM leadership too often, and this was a disruptive factor for the company in its dealings with the Mbuyazi tribal authority.

The union called for the Department of Mineral and Energy Resources to review RBM’s social and labour plans (SLP) to see where there were gaps that needed to be closed.

The community misunderstood the SLP, which did not “provide long and lasting solutions to all stakeholders”, NUM said.

As a result, workers are blocked by angry community members when going to work,” NUM stated in the memorandum. BM

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