Violent protests, often characterized by deadly shootings and barricades of burning tires, are making it harder for the world’s biggest mining companies to operate in South Africa.
Rio Tinto Group shuttered its Richards Bay Minerals unit on Wednesday and paused a $463 million expansion project amid escalating violence in surrounding communities that led to an employee being shot and injured. The stoppage will further sap investor sentiment in a country where business confidence is near the lowest level in two decades.
The freezing of the Zulti South project comes as President Cyril Ramaphosa battles to stimulate growth and retain the nation’s last investment-grade credit rating. South Africa’s economy contracted for a second quarter this year in the three months through September as farming, mining and factory output slumped.
The decision to halt operations was preceded by weeks of community protests in the area around the mine, causing “on-and-off disruptions,” said RBM Managing Director Werner Duvenhage. The demonstrations aren’t related to the company, but endanger employees’ lives and require government intervention, he said.
Losses will be “significant,” according to Duvenhage, who said he doesn’t know when RBM will resume operations. Community disruptions around mines are leading to huge losses for producers, Anglo American Platinum Ltd.
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