Billionaire Robert Friedland’s South African platinum project may be held up by a split in the local community, with residents accusing his Ivanhoe Mines Ltd. (IVN) of subverting a process to give them a fair share in the mine.
People living in the Mokopane area in the northern Limpopo province, one of the country’s poorest regions, are lobbying the government to delay the mining license of Ivanhoe’s local unit, Ivanplats, three activists from the area said. They’re unhappy because the company sold the community a 20 percent stake in the $1.6 billion Platreef project to fulfill government demands for black shareholding without all of the residents being part of the negotiations over the terms of the deal, they said.
While the stake will be paid from future proceeds of the mine, residents don’t know what the interest rate on those repayments are and how long they will have to wait before seeing any dividends from the project, the opponents said.
“The million-dollar question for us is when will our debt be fully repaid,” Aubrey Langa, 56, an adviser to the Kopano Committee that represents five settlements in the community, said in an Oct. 1 interview in Johannesburg. “They won’t tell us. The community will be drowning in debt for a very long time. We won’t allow them to build a mine until this is cleared up.”
The activists say the local chief, L.V. Kekana, who’s paid a stipend by Ivanplats, helped rig elections to the trust set up to defend local interests. Ivanplats’ mining license for Platreef may be held up while the Department of Mineral Resources investigates the dispute, according to Lucas Moalusi, a partner with Toronto-based law firm Fasken Martineau DuMoulin LLP.
Withhold Right
“The DMR can withhold the execution of the mining right until the issues with the community are resolved,” Moalusi, who specializes in working out agreements between mining companies and communities in South Africa, said in an interview. He isn’t advising on the Platreef case.
Ivanplats said it sufficiently consulted the community and doesn’t have an improper relationship with chief Kekana. It held more than 150 meetings over 18 months to inform the community of the black empowerment deal, according to an e-mailed response to questions.
Local residents will carry no liability for any debt, which will be repaid “on a priority basis to ensure early cash flow,” Ivanplats said. The interest comes at a “significant discount” to South Africa’s prime lending rate, and the company said it’s also making an 11-million rand ($977,404) annual donation to the community.
Residents Supportive
“We can confidently state that the overwhelming majority of residents in the Platreef project’s host communities are supportive of the planned development,” Ivanplats said. “It is evident that some individuals and groups continue to refuse to work with the company for the good of the entire community -– and have in fact violently disrupted a number of our public meetings.”
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