Rio Tinto has ceased mining at its flagship project in South Africa due to escalating violence in a sign of the mounting security risks facing investors in the country.
The decision to stop mining operations at the Richards Bay Minerals business in South Africa’s KwaZulu-Natal came after an employee was shot and seriously injured in one of a series of incidents in the past few days, the company said on Wednesday.
Security problems are a growing concern for South African miners who were already struggling with ageing mines, increasing labour costs and unreliable power supplies.
President Cyril Ramaphosa, a former businessman and mining trade union leader, was elected in 2018 promising to revive the economy, attract investment and create jobs. Instead the country has suffered an increase in unrest, known locally as “service delivery protests”, due to simmering frustrations over a lack of economic opportunities and poor public services.
RBM was supposed to be a success story for Mr Ramaphosa. In April, Rio Tinto said it would invest $463m into extending the life of the operations, one of the biggest commitments secured by Mr Ramaphosa in a drive to bring foreign investment back to South Africa after a decade of stagnant growth and corruption scandals.
Rio said on Wednesday it had been forced to halt mining and to operate its smelters at a reduced level after an escalation in violence in the communities surrounding the operations and an increase in criminal activities towards RBM employees.
“The safety of our people is Rio Tinto’s key priority and we have taken decisive action to stop operations to reduce the risk of serious harm to our team members,” said Bold Baatar, chief executive of energy and minerals.
He added: “We are in discussions with the local communities, regional and national governments, and the police in order to find a way to address the safety and security issues. Our goal is to return RBM to normal operations in a safe and sustainable way.”
RBM was formed in 1976 to mine the vast mineral-rich sands in the coastal dunes that extend in a 2km-wide strip for 17km north of Richards Bay, on South Africa’s east coast.
Rio owns 74 per cent of the business, which is the biggest taxpayer in KwaZulu-Natal, one of South Africa’s poorest provinces. The remainder is shared between an employee trust, local communities and investors in a scheme to increase the black majority’s ownership of mines.
Despite the communities’ ownership, there have long been tensions over the distribution of jobs and contracts associated with RBM’s operations, which have often turned violent, in some cases leading to the killing of local activists.
The mine also suspended operations last year when a security guard was killed after clashes with the employees of a local contractor.
“The violence is happening particularly with mining communities who aren’t having water and power provided by the company,” said Indigo Ellis, head of Africa at Verisk Maplecroft, a risk consultancy.
“And there’s a political dimension that goes further than poor service provision. The area is incredibly anti-Ramaphosa,” she said, referring to South Africa’s president.
As a result of the curtailment, Rio said that 2019 production of titanium dioxide slag, a mineral used to create white pigment for paint production, would be at the bottom end of a previously announced range of between 1.2m and 1.4m tonnes.