Business Maverick: State failure: Rio declares force majeure at RBM in face of violence

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Global mining giant Rio Tinto has declared force majeure on customer contracts at Richards Bay Minerals and pulled the plug on the biggest contributor to the KwaZulu-Natal economy. This is in response to the volatile security situation in the wake of the assassination of general manager Nico Swart in May. This is the cost of state failure.

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 ceased “until the safety and security position improves”.

“Following the tragic death of our colleague, Nico Swart, RBM has faced serious challenges in recent weeks, with business disruptions orchestrated by criminals which have put its people at risk and resulted in the costly destruction and theft of property. This follows in the footsteps of previous violent incidents,” RBM said.

“In addition, RBM procured goods and services to the value of R5.5-billion in 2020, of which R1.5-billion was spent on local municipal businesses and over R500-million in its communities, expanding business opportunities, bolstering economic development and helping local communities become more resilient and self-reliant over the longer term,” it said.

South Africa’s mining sector gets battered by periodic waves of social and labour unrest, much of it rooted in the inequities of the apartheid past. But in recent years, outright criminality has also become a major threat, with the emergence of a “procurement mafia” literally gunning for a slice of the lucrative action. The rebooting Blyvoor gold mine west of Johannesburg wasafter one of its directors and the leader of its in-house union was shot dead.

 

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