Richards Bay Minerals files court order to ‘vary’ community trust deeds after mismanagement concerns

20 Nov 2022

Richards Bay Minerals (RBM), a unit of global mining giant Rio Tinto, has another ‘community’ issue on its hands which has gone pear-shaped. It is seeking a high court order to ‘vary’ its community trust deeds, a key part of its BEE profile, over concerns that they have been mismanaged.

RBM said in a statement on Friday it had “brought forward an application to the KwaZulu-Natal High Court seeking an order to vary the trust deeds”.

“Established in 2009 as part of RBM’s BEE deal, the community trusts were developed to enable members of the host communities proximate to the operations to benefit from an ownership interest in RBM. For several years, RBM has had serious concerns about the governance and management of the community trusts and trusts’ assets,” it said.

Reading between the lines, it seems the trustees have been stuffing things up, which may help to explain the levels of social unrest in the area.

“The trusts have not appeared to be consistently delivering meaningful and sustainable benefit to community members, and in August 2021 all parties committed to reforming the trusts in a manner consistent with broad-based community empowerment,” RBM said.

Visit Daily Maverick's home page for more news, analysis and investigations

It went on to say that the trustees had reneged on this agreement - big surprise! - forcing RBM’s hand.

“Litigation is a last resort and we have always preferred to achieve trust reform through amicable means. Unfortunately, all prior attempts to reach a negotiated outcome have been unsuccessful, and with the court application we hope to achieve a change in the trust deeds that supports our goal of providing our host communities with long-term, broad-based empowerment,” RBM Managing Director Werner Duvenhage was quoted as saying.

This is the latest twist in RBM’s saga to keep the peace with its host communities, underscoring the social risks of investing in South Africa’s mining sector.

RBM, which is 74% owned by Rio Tinto, declared force majeure in June last year in the face of mounting security concerns around its operations after General Manager Nico Swart was shot dead in May 2021 while he was driving the work. The company was effectively being shaken down by gangsters - one of the costs of doing business in South Africa’s gangster state.

Read more in Daily Maverick: "State failure: Rio declares force majeure at RBM in face of violence"

The closure threatened more than 5,000 jobs but the company did restart the operations after a few weeks after reaching an agreement with “community stakeholders” - there’s that word again - averting a major blow to KZN’s economy as RBM is the province’s largest private sector player. RBM mostly produces ilmenite, rutile and zircon, used in a range of industrial items from paint to toothpaste, which are extracted from mineral sands.

The issue also highlights the shoddy mess that are “community trusts”, many of which are opaque and often fail - as apparently in this case - to fulfil their mandate of upliftment and socioeconomic development. Several have been flashpoints of tension, and the squabble around RBM’s is far from over. DM/BM

Categories:

Tags:

DM is much better if you are signed in...

Business Maverick