First published in the Daily Maverick 168 weekly newspaper.
RBM, 74% owned by Australian mining giant Rio Tinto, has been the most recent poster child for SA’s dysfunctional mining legislative and administrative environment.
The facts are worth a quick review. In May this year, RBM general manager of operational services Nico Swart was murdered on his way to work. More than 20 high-calibre bullets were fired into Swart’s car: this was obviously not a random killing. This was a professional hit.
Subsequently, a whole collection of RBM’s mining equipment was set on fire, notwithstanding the intervention of Mineral Resources and Energy (DMRE) Minister Gwede Mantashe. Operations were shut down to protect the business and employees, and force majeure was declared.
RBM is KwaZulu-Natal’s largest tax-payer. It contributed about R8-billion to the local economy in 2020. To complicate matters, a mine extension is necessary to lengthen the life of the mine, which would otherwise have to close in about 2030. The extension, dubbed Zulti South, would constitute a R6.7-billion project and would contribute about R100-billion to the local economy over its 25-year lifespan.
This extension is already very late, and the cause of the hold-up has not been clear. It has been classified under the amorphous title “problems with community relations”, which is code for saying that the payoffs haven’t been made.
Problems have been long-standing. This is the second assassination of a senior RBM representative after its Human Resources General Manager Ronny Nzimande was killed in the same manner in 2016. It will surprise nobody to know that no arrests have been made in this case either.
Following the closure of the mine, there have been frantic discussions about how it will open. These came to a head this week when the company signed an agreement with “community stakeholders”, which will entail “enhanced governance and controls of community trusts”. Simultaneously, RBM transferred an astonishing R130-million in funds to the “community trusts”.
So how “community” are these “community trusts”? RBM MD Werner Duvenhage said during a media briefing on 25 August that these funds had accumulated over time. A portion is dividend payments: four communities are all BEE shareholders in RBM. Another consists of CSI payments, designed to ensure that money flows to the trusts even when no dividends are issued.
Duvenhage did not specify what RBM or even the police consider to be the most likely explanation for the killings, saying it had to do with the “flow of funds”. Well, I think that’s pretty obvious. The nature of the new agreement between the amakhosi, the traditional leaders of the four regions involved, is revealing. They have agreed to improve governance of the trusts and RBM has agreed to release the accumulated funds. Improvements include independent auditing, something that clearly hasn’t been happening.
Duvenhage didn’t say this but, reading between the lines, it appears that the actual communities involved have been furious about not seeing the cash deposited in the trusts of notional “community” organisations for years. RBM, caught between the actual community and the notional community, has pressured the trusts to become compliant, apparently, to no avail.
The trusts are dominated by the feudal lords who have stacked the trust boards with their henchmen. In the process, it seems they have pocketed chunks of the cash, or at the very least not spent it effectively. My guess is that too resist being caught, they have objected to external auditing. And when the company turned off the taps, they … well, who knows, but the fact is that senior staffers are dead and the company’s equipment has been torched.
What is the moral of this story? The company, community trusts and DMRE think they have solved the problem, but they haven’t. The agreement means the mine reopens, which satisfies the company and shareholders, the government gets its tax and the “community” groups get their payoffs.
But I think it’s pretty clear that, if you put R130-million on the table, there is a pretty huge incentive to create havoc to get it – or to create havoc to ensure that other people don’t get it. The cause of the problem is not actually the lack of transparency in the trusts, although that is part of it. It is the operating environment and creation of incentive structures that puts mining operations at risk. DM168
This story first appeared in our weekly Daily Maverick 168 newspaper which is available for R25 at Pick n Pay, Exclusive Books and airport bookstores. For your nearest stockist, please click here.