So far, so good for Richards Bay Minerals’ unprecedented pilot project to test social stability

Richards Bay Minerals’ (RBM’s) testing of the waters before a possible $500-million expansion by its mother ship Rio Tinto suggests that the social environment in the area is conducive to further investment.

As we reported last year, RBM launched an unprecedented experiment in October that could only have been conceived in South Africa’s fraught and turbulent social landscape. 

Read more: Richards Bay Minerals launches pilot project to test social stability for planned expansion

The idea is simple: build a pilot plant that is a miniature version of the potential big one in the pipeline and see if this can be done without community disruptions or shakedowns from the procurement mafia. 

To use a fishing analogy, it’s basically a chumming exercise, and so far the criminals have not risen to the bait. 

“It’s been going well,” RBM Managing Director Werner Duvenhage told Daily Maverick in an interview on the sidelines of the Investing in African Mining Indaba in Cape Town.

“In four months, there has been no intimidation, no threats, no violence. If I had scripted it, this is how I would have scripted it,” he said.

The backdrop to this highly unusual project is the violence and intimidation that engulfed RBM a few years ago. In 2021, the company declared force majeure on customer contracts after the assassination of general manager Nico Swart, who died in a hail of bullets.

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

RBM had fallen prey to outright criminal threats by mafias seeking a piece of its rich procurement pie. Another flashpoint was opaque community trusts.

Read more: Loaded for Bear: The trouble with community trusts and the mining industry

The Zulti South expansion project — initially estimated to cost $463-million (about R8.5-billion) — was put on ice by Rio Tinto in 2020 as the security situation around RBM deteriorated. 

RBM, which mines mineral sands for zircon, rutile, and other minerals used in a range of products from toothpaste to sunscreen, is vital to KwaZulu-Natal’s economy. It is the province’s biggest taxpayer and private sector employer, and the expansion project is crucial to keeping the mining operations afloat.

A more forceful police presence and other security measures have brought calm back to the operations, but Rio has not yet made a decision on the expansion. 

This is the soil from which the pilot project sprung. 

“We had all contractors from the local community for the initial phase,” Duvenhage said. “For the next phase we need to bring in contractors from the region, but they are not from the (local) community. This is the next boundary that we have to step over.” 

The “boundary” that is being tested is the community reaction. Will local business people feel left out if outside contractors are brought in, and if so, how will they react to this? 

If all goes swimmingly from here, the plant should be commissioned by July. 

That is also the month when the Rio board is expected to make a decision on the expansion, which will probably now cost more than $500-million.  

“Earlier this year we completed the feasibility study and it’s going through a review process,” Duvenhage said. 

The stakes are sky high. But so far, so good. DM