Global mining giant Rio Tinto Group has declared force majeure on customer contracts at Richards Bay Minerals due to the volatile security and escalating violence. This is coming in the wake of the assassination of general manager Nico Swart in May.
Rio Tinto said in a statement that the decision stemmed from the “escalation in the security situation at the operations” and that all mining and smelting operations have been terminated “until the safety and security position improves”.
Richards Bay Minerals said in another statement, that its operations – which mostly produce titanium dioxide slag, used in the production of a range of industrial items from paint to toothpaste, had basically been terrorised by miscreants.
RBM’s suspension of operations is a blow to the South African government’s efforts to attract new investment. In 2019, violence forced RBM to temporarily halt its expansion operation valued at a $463 million.
In recent times, community protests have caused mining equipment and infrastructure to be destroyed and access roads blocked. The community has raised concerns ranging from poor municipal services to labour conditions and youth unemployment.
Minerals Council South Africa said the violence around mining sites, including the burning of equipment and the intimidation of mine workers, harms South Africa’s reputation as an investment destination.
“The closure of mining operations due to security concerns negatively impacts on production, employment and investment, and will ultimately have severe adverse economic and social consequences,” the council said in a statement.
RBM is currently engaging regional and national governments to get a better understanding of the cause of the violence. RBM’s furnaces are currently being run on low power as they can’t be shut down completely.
Force Majeure clauses ensure that in an event, if an act or event is beyond the reasonable control, and not the result of the fault or negligence, of the affected Party and such Party had been unable to overcome such act or event with the exercise of due diligence, then such company may declare Force Majeure .