It’s been 15 years since Australian company Mineral Commodities Ltd started its perilous endeavour to mine the titanium-rich dunes of Xolobeni on the Wild Coast.
Opponents of the mining worry about displacement from their homes and grazing lands, and environmental degradation. But its supporters claim that a huge economic benefit will accrue to the area, which is one of the poorest in the country.
These conflicting views have resulted in heated engagements, legal challenges and several deaths over the past 15 years.
Last month, mineral resources minister Gwede Mantashe proposed extending a moratorium on mining the area for another two years.
When Mantashe visited the area recently to engage with community members, tension flared and the event culminated in police firing tear gas and arresting people.
With the unending conflict, "it’s a wonder Mineral Commodities are so wedded to this", says Wild Coast social worker John Clarke.
Nonhle Mbuthuma of the Amadiba Crisis Committee, which represents community members who are against the mine, says the company’s insistence on mining in the area does not make sense. "This should have been over a long time ago," she says.
Mineral Commodities did not respond to requests for comment. A potential resource of about R20bn lies in the Xolobeni dunes.
Mineral Commodities is listed on the Australian Stock Exchange, with market capitalisation of about US$60m. Its main activity is at the Tormin mineral sands project in the Western Cape, held through its SA subsidiary Mineral Sands Resources. Tormin is a high-grade resource that is richest in garnet — an industrial abrasive used for, among other things, the manufacture of sandpaper. The company’s main revenue driver is the Zircon mined there, used in ceramics such as tiles.
Ward 25 in Bizana, of which Xolobeni is part, is the poorest in the area with high levels of illiteracy and dependence — high dependence — on social grants. The community wants to use tourism and mining to develop itself further.Gwede Mantashe
At Xolobeni, Mineral Commodities holds a 56% interest in Transworld Energy and Mineral Resources, the holding company for the mineral sands project. It looked as though the company would walk away when, in mid-2016, it announced it had entered into a memorandum of understanding with its empowerment partner Keysha Investments to divest its interest in Transworld. But there is no evidence divestment happened.
The resource at Xolobeni is much lower grade than at Tormin but is large — the 10th-largest undeveloped heavy mineral deposit in the world, mining analysts say.
There is only a little Zircon on the Wild Coast dunes. Most of the resource is ilmenite, used to produce titanium dioxide — a brilliant white, nontoxic pigment that can colour paint, plastic and sunscreen. It is also used in the manufacture of solar panels, a fast-growing industry.
With about 9-million tonnes of ilmenite in the Xolobeni dunes and the mineral now trading at about $150/tonne — there is about $1.35bn to be made, or R19.6bn at the current rand/dollar exchange rate.
That’s about as much as global mining companies such as BHP Billiton make in 10 days, but for a significantly smaller company like Mineral Commodities it’s more money than it has made in three years.
Community members who want the mining to go ahead say that there will be a large economic benefit for Xolobeni residents too.
According to Mantashe, 10 organisations made presentations when he and a team visited Xolobeni. Only one, the Amadiba Crisis Committee, made a presentation against mining in the area.
"Ward 25 in Bizana, of which Xolobeni is part, is the poorest in the area with high levels of illiteracy and dependence — high dependence — on social grants," he says. "The community wants to use tourism and mining to develop itself further."
But the experience at Tormin suggests otherwise.
According to the Mail & Guardian, a report by OxfamSA said that Mineral Sands Resources generated net profit of R150m in its 2017 financial year, but it had not delivered on its community-upliftment programme,
Tormin was also found to have broken the law when it expanded its mining activity, which resulted in a cliff collapse. Mineral Sands Resources has since proposed a substantial extension of the Tormin mine and stakeholders have to October 18 to comment.
The new Mining Charter, gazetted last Thursday, is intended to be more inclusive of mining’s host communities and includes a provision that any new mining rights holder must give a 5% stake in the mine to the host community, which could be done through an equity equivalent vehicle like a trust.
Community organisations want to know how this will be administered so that it does not become yet another conduit for corruption. Mbuthuma worries that there is scope for corruption in any such trust, especially at Xolobeni.
Mantashe says that a solution must be found. "Where there is a deposit, it should be mined," he says, but it should be done responsibly.
Mbuthuma says the state is now using taxpayers’ money to push for mining Xolobeni. "It’s clear to us the department of mineral resources is promoting mining instead of regulating it," she says.
The crisis committee has taken the department and Transworld Energy to court to stop the granting of mining rights. The case was heard in April and judgment was reserved.
Mineral Commodities and its subsidiaries have launched defamation lawsuits against attorneys and activists opposed to mining the dunes.