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... but with a potential R20bn at stake, tempers run high


... but with a potential R20bn at stake, tempers run high

Xolobeni has the 10th-largest undeveloped heavy mineral deposit in the world, mining analysts say

Lisa Steyn

It has been 15 years since Australian company Mineral Commodities Ltd started its perilous endeavour to mine the titanium-rich dunes of Xolobeni on the Wild Coast.
People opposed to the mining worry about displacement from their homes and grazing lands, and environmental degradation. Those who support it claim a huge economic benefit will accrue to the area, one of the poorest in SA.
These conflicting views have resulted in heated engagements, legal challenges and several deaths over the past 15 years.
Last month Mineral Resources Minister Gwede Mantashe proposed extending a moratorium on mining the area for another two years. When he visited the area recently to engage community members, tensions flared and the event culminated in police firing teargas and arresting people.
With the unending conflict, “it’s a wonder why Mineral Commodities are so wedded to this,” said Wild Coast social worker John Clarke.
Nonhle Mbuthuma of the Amadiba Crisis Committee, which represents community members who are against the mine, said the company’s insistence on mining in the area does not make sense. “This should have been over a long time ago.”
Mineral Commodities did not respond to requests for comment. The tenacious company is still seeking a right to mine the area – a potential resource of some R20bn lies in the Xolobeni dunes.
Mineral Commodities is a relatively small company listed on the Australian Stock Exchange, with a market capitalisation of around $60m. Its main activity is at the Tormin mineral sands project in the Western Cape held through its South African subsidiary Mineral Sands Resources.
Tormin is a high grade resource that is richest in garnet – an industrial abrasive used for, among other things, the manufacture of sandpaper. The company’s main revenue driver is the zircon mined there, used in ceramics such as tiles.
At Xolobeni, Mineral Commodities holds a 56% interest in Transworld Energy and Mineral Resources, the holding company for the mineral sands project. It looked as though the company would walk away when, in mid-2016, it announced it had entered into a memorandum of understanding with its empowerment partner Keysha Investments to divest its interest in Transworld. But to date there is no evidence the divestment happened.
The resource at Xolobeni is much lower-grade than at Tormin but is large – the 10th-largest undeveloped heavy mineral deposit in the world, mining analysts say.
There is only a little zircon on the Wild Coast dunes. Most of the resource is ilmenite, used to produce titanium dioxide – a brilliant white, non-toxic pigment which can colour paint, plastic and sunscreen. It is also used in the manufacture of solar panels, which is a fast-growing industry.
With some nine million tons of ilmenite in the Xolobeni dunes and the mineral currently trading at around $150 a ton, there is about $1.35bn to be made, or R19.6bn at the current rand-dollar exchange rate.
That’s about as much as global mining companies such as BHP Billiton make in 10 days, but for a significantly smaller company like Mineral Commodities it’s more money than it has made in three years.
Community members who want the mining to go ahead believe there will be a large economic benefit for Xolobeni residents too.
According to Mantashe, 10 organisations made presentations when he and a team visited Xolobeni and only one, the Amadiba Crisis Committee, made a presentation against mining in the area.
“Ward 25 in Bizana, of which Xolobeni is part, is the poorest in the area with high levels of illiteracy and dependence – high dependence – on social grants,” he says. “The community wants to use tourism and mining to develop itself further.”
But the experience at Tormin suggests otherwise. According to the Mail & Guardian, a report by OxfamSA found that Mineral Sands Resources had generated net profits of R150m in its 2017 financial year, but it had not delivered on its community upliftment programme.
Tormin was also found to have broken the law when it expanded its mining activities, which resulted in a cliff collapse. Mineral Sands Resources have since proposed a substantial extension of the Tormin mine and stakeholders have until October 18 to submit comments.
The new mining charter, gazetted last Thursday, attempts to be more inclusive of mining’s host communities and includes a provision that any new mining right holder must give a 5% stake in the mine to the host community, which could be done through an equity equivalent vehicle such as a trust. Community organisations want to know how this will be administered so that it does not become yet another conduit for corruption.
Mbuthuma worries there is scope for corruption in any such trust, especially at Xolobeni.
Mantashe believes a solution must be found. “Where there is a deposit, it should be mined,” he said, but added that it should be done responsibly.
Mbuthuma said the state is now using taxpayers’ money to push for mining Xolobeni. “It’s clear to us the department of mineral resources is promoting mining instead of regulating it,” she said.
The crisis committee has taken the department and Transworld Energy to court to stop the granting of mining rights. The case was heard in April and judgment was reserved.
Mineral Commodities and its subsidiaries have launched defamation lawsuits against attorneys and activists opposed to mining the dunes.

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