The delicate art of moving an entire town. Everything. Everyone. Plus the churches

To date, 507 of 517 households have been successfully moved 32km to replacement homes in the new purpose-built suburb of Siyathemba. Negotiations continue with the remaining 10 households on the settlement, but also include deliberations with a much more complicated and unforeseen demographic, referred to as “renters”.

It not only includes squatters on the remaining infrastructure, but also refers to people and informal businesses left behind or destitute after their previous landlords moved away and no longer could or wanted to accommodate them. Some of the people left behind are just victims of the RDP housing waiting list.

Kumba has already levelled all unoccupied, unserviced houses and buildings, which it says “prevents the future illegal occupation of the vacated premises”.

Meanwhile, negotiations are ongoing with the 10 households holding out for a bigger payday, and efforts in evacuating the other “unexpected stakeholders” — some who fall outside the mine’s responsibility purview — from the Dingleton precincts is paying off. Kumba has chosen to provide an interim solution in the provision of 104 two-bedroom Community Rental Units (CRU) in Siyathemba.

The resources company has donated the land to Gamagara local municipality, which will take over the running of the residential complex when the current management company’s contract expires in 2021. Only 54 units are presently occupied.

It's been an extraordinary project. Here are some interesting facts about the effort. In 1953 the parastatal Iscor created the town of Sishen to house employees at the adjacent mine. The town was renamed Dingleton in 1990. The much larger town of Kathu came into development in 1974 on the other side of the mine.

It would become the regional centre of the district and seat of local government. The scope of the building and relocation included: 308 privately owned homes, 91 houses belonging to Kumba, 51 to Transnet, 13 to the SA National Defence Force and 54 municipal homes. Several business premises, a couple of churches, a primary school, a police station and municipal buildings, which included a library. They all had to be moved.

Kumba started the process of consulting and negotiating with the residents of Dingleton about the relocation to Siyathemba more than 12 years ago and Kumba says the relocation will allow it to mine in the area of the old town which will, in turn, extend Sishen mine’s operational life, and enable it to continue providing jobs and development as the largest private employer in the region.

The resettlement process comes with a price tag of R3-billion, which Kumba CEO Themba Mkhwanazi says is considered an associated cost in maintaining the life of the mine. The current lifespan of the mining operations at Sishen is estimated at 13 years, with the option of extending it to 20 years if current exploration projects — including extending blasting and extraction endeavours around the Dingleton — pans out.

Kumba is also on the verge of advancing technology that will unlock valuable ore from millions of tons of low-grade waste it generates every year, giving it options that could extend the life of its flagship Sishen mine. The technology, which was refined by Exxaro Resources, the 20% partner in the Sishen Iron Ore Company, entails using a specially created form of minuscule globules of ferro-silicon that enables Kumba to upgrade ore with a 40% to 48% iron content to the sought-after 64%-65% iron content that Kumba sells.

The company says this already-mined material is not the focus of the technology, rather the low-grade material coming from daily mining operations. There is a 200-million-ton resource of this low-grade ore they are “integrating this project in the Sishen life of mine and is expecting it to be positive”.

“The life of mine is the most pertinent issue for us,” Mkhwanazi says.

He says the extension of the life of Sishen is a priority for Kumba, which has an intensive exploration programme at its two mines in the Northern Cape and is planning to use a technology called ultra-high dense media separation to prolong its stay at its operations.

At the launch of the new youth centre (also a Kumba initiative) in the Northern Cape’s newest living establishment on 16 April 2019, to which the Business Maverick was invited, the Kumba executive didn’t want to get dragged into specifics around the costings of maintaining the life span status quo, or how the R3-billion allocated to the resettlement project fits into the plan, for that matter.

The single most critical decision in the development of a mining project is the determination of the size of the operation. How big will the mine and mill be? What will be the daily and annual throughput?

“All of the major elements of the project hinge on this decision: the capital cost, the operating cost, technological advancements and the ranging price of the commodity. It is a complicated task, as it keeps on changing and needs to be continuously verified and audited, and the reason committing to any figures was not possible.

“Moving the old town allows for further mining in the area thus extending the 66-year-old Sishen mine’s operational life and in turn enabling Kumba to continue providing jobs and development as the largest private employer in the region,” Kumba said in its official comment.

Management, however, was prepared to confirm that the cost included building the new public infrastructure and private homesteads as well as the extension of existing government buildings and all the related landscaping, as well as setting up the provision of basic services.

It also includes design and legal fees and transfer costs, as well as one of the sweeter parts of the deal — a trust set up with an external financial institution to cover the rates and taxes of all the relocated residents for the next 25 years. Generosity aside, it is supposed to cover the gap left by the sudden increase in property values due to the sudden upgrade and geographical shift of personal abodes. As the company states:

“Homeowners now own brand-new houses of significantly higher value — up to 10 times more — than their original properties.”

Property values in Kathu are also generally sky high. Dictated by the market, house prices average around R1.5-million — in the small mining town where finding a place to live is not an easy task, especially for the five households which opted to be bought (instead of receiving new houses in Siyathemba) and had to find alternative lodging outside the suburb, for which Kumba will pay for. Some have even moved out of the region.

Despite Kumba remaining mum on the benefits the big move will bring to the company’s bottom line or what the estimated value of the resource is, it was vocal about the benefit the shift brought to the community, town and ruling authorities as a whole.

Apart from the benefits already the mentioned, the company says that homeowners received fair and generous compensation according to a negotiated framework, which included compensation for reduced stand sizes at R280/m², physical removal costs of the households, re-decorating and inconvenience allowances for households, compensation for businesses to stop operating in Dingleton and an additional R100,000 cash compensation for each household.

“The community also benefits from the opportunities which being in closer proximity to existing and upgraded infrastructure in town brings.”

And of course, the municipality will enjoy the upgrade to its service delivery pipeline and the surety of rates and tax income from these households for a quarter of a century.

Mkhwanazi added:

“We didn’t just want to build houses, churches and schools, we wanted to partner with the people of Siyathemba and the Gamagara Municipality to help change people’s lives and create a new, thriving community.

“That is why, over the last four years since 2014, Kumba invested over R300-million towards sustainable development in Siyathemba by supporting community development projects and entrepreneurs by providing business development training, procuring goods and services from small, medium and micro enterprises (SMMEs) based within Siyathemba as well as youth training and development. Most of these suppliers have gone through Kumba’s Enterprise Development programme.”

In line with its commitment to creating three indirect jobs for every on-site job by 2025, Kumba has dramatically increased its spending with local businesses from R520-million in 2017, to R1.4-billion in 2018 rising to R2-billion in 2019. For 2018 alone Kumba supported BEE suppliers with the procurement of close to R12-billion of products and services. Of this, R1.4-billion was spent with 267 host community businesses, up from 162 in 2017 and 40% above what was targeted for 2018. These businesses created about 2,700 new jobs and provided income for more than 16,000 people.

A recent donation was the new youth centre, which provides free access to sporting, cultural and learning activities. Mkhwanazi concluded by saying:

“I believe there is a special relationship between Kumba Iron Ore and Siyathemba community that has been built over the years. We will continue this strategy of supporting local businesses and entrepreneurs, especially the youth, with training and business opportunities. Our view is that for the community to thrive, the mine must thrive so we can reinvest in our people and region.”

All the hoopla and praises aside, and whether the community will remain happy is another story, but one cannot deny the impressive feat whereby a company successfully relocated thousands of people, with substantial benefit to most stakeholders.

The size and scale of the relocation is unprecedented in South Africa and was conducted according to the best-practice codes of the International Finance Corporation and involved extensive consultations and negotiations with individual homeowners and a resettlement working group comprised of elected community representatives and local ward councillors.

In addition to houses and compensation, post-resettlement substantial socio-economic benefits and support were provided to the community. Kumba has invested well above R300-million in the past four years towards sustainable development in the Siyathemba post-relocation. DM