Rio Tinto said in a statement that the decision stemmed from the “escalation in the security situation at the operations” and that all mining and smelting operations have been ceased “until the safety and security position improves”.
In a separate statement, Richards Bay Minerals said that its operations – which mostly produce titanium dioxide slag, used in the production of a range of industrial items from paint to toothpaste – had basically been terrorised by criminals. Think protection racket or something along those sordid lines, except in this case it is not some poor greengrocer on the corner getting muscled by the local mob but a major global and publicly listed company with shareholders that would include pension funds.
“Following the tragic death of our colleague, Nico Swart, RBM has faced serious challenges in recent weeks, with business disruptions orchestrated by criminals which have put its people at risk and resulted in the costly destruction and theft of property. This follows in the footsteps of previous violent incidents,” RBM said.
The police clearly cannot do their job properly there and the cost of state failure in this case will be very high. RBM said its direct contribution to the South African economy in 2020 was R8-billion, including wages and salaries to more than 5,000 employees.
“In addition, RBM procured goods and services to the value of R5.5-billion in 2020, of which R1.5-billion was spent on local municipal businesses and over R500-million in its communities, expanding business opportunities, bolstering economic development and helping local communities become more resilient and self-reliant over the longer term,” it said.
It makes the biggest private-sector contribution to the KwaZulu-Natal economy – at least it did. Eskom is likely to have a bit of spare capacity as a result. Rio had already halted a planned $460-million expansion project to RBM two years ago because of violence and protests. That is foreign direct investment which would have created jobs and business opportunities and generated tax revenue. Attracting that kind of investment is at the top of President Cyril Ramaphosa’s economic agenda, which is crumbling like a sand castle on a KZN beach when the spring tide comes in.
South Africa’s mining sector gets battered by periodic waves of social and labour unrest, much of it rooted in the inequities of the apartheid past. But in recent years, outright criminality has also become a major threat, with the emergence of a “procurement mafia” literally gunning for a slice of the lucrative action. The rebooting Blyvoor gold mine west of Johannesburg was recently shut for several weeks in the face of intimidation after one of its directors and the leader of its in-house union was shot dead. The police also mostly failed to do their job in that case.
And a company like Rio is increasingly mindful of ESGs – environmental, social and governance concerns. In 2020, Rio destroyed two 46,000-year-old Aboriginal rock shelter sites in Australia, a bone-headed act of sheer stupidity that cost the CEO his job. In this day and age, the company is hardly going to put its employees’ lives and limbs at risk from criminal attack. But that means 5,000 direct livelihoods will suffer.
All because the South African Police Service demonstrably cannot do its job.
After a victory for the rule of law on Tuesday with former president Jacob Zuma convicted of contempt and sentenced to 15 months in prison by the apex court, this is a salient reminder that the rule of lawlessness is the norm on the ground in South Africa.
Further up the tropical Indian Ocean coast, French oil major Total has done the same thing in the face of a violent Islamic insurgency that threatens gas projects worth tens of billions of dollars.
This is all unfolding against the backdrop of a global commodities boom which is one of the few bright spots in the South African economy. This is another stark example of how that boom is going to bust on South Africa’s shores. DM/BM