RBM takes dispute over community trust governance to court after negotiations fail

RICHARDS Bay Minerals (RBM) is to take a long-standing dispute over the governance of community trusts it helped create to South Africa’s High Court after negotiations with local authorities to reform them failed.

An application has been brought to the KwaZulu-Natal High court seeking to change the trust deeds. “Unfortunately, all prior attempts to reach a negotiated outcome have been unsuccessful,” said Werner Duvenhage, MD of RBM of the court application.

RBM, in which Australia’s Rio Tinto has a 74% stake, said discussions with the Amakhosi (tribal chief) and trustees to reform the community trusts foundered on November 17. It said the trusts had not delivered consistent benefits to the community.

This follows an agreement in August last year in which all parties committed to the reform of the trusts in line with broad-based community empowerment.

“With the trustees reneging on the August 2021 agreement which committed all parties to progressing a process to reform the trusts, RBM has been left with no option but to approach the High Court,” said Duvenhage. “Litigation is a last resort and we have always preferred to achieve trust reform through amicable means.”

The trust reform process aims to enhance the governance and administration of the trusts and improve their ability to achieve the objective of delivering broad-based public benefit to the four host communities, said RBM.

The trusts were formed in 2009 has part of RBM’s black economic empowerment plan, but they have been embroiled in controversy. In August, 2021, Duvenhage denied a suggestion  that RBM had paid out R130m to the community trusts – effectively extortion – following the suspected assassination of the firm’s GM Nico Swart in May of that year.

Conditions around the mine which became so bad that its property was invaded and damaged in June 2021.

RMB shut the mine, declaring a force majeure. It reopened in July following an emergency meeting between Rio Tinto CEO Jakob Stausholm and Cyril Ramaphosa, South African president.

The court application is a blow to RBM’s hopes to start the $463m Zulti South, a project critical to the 25-year life extension of the mine. “It is critical so the conversation around Zulti South has to be brought back as soon as we have been able to stabilise current operations,” said Duvenhage last year.