Stand-off in Prieska over Orion mining project

Written by Ciaran Ryan. Posted in Journalism

Business forum says Orion’s excluding the local community from business opportunities. ‘Not true’, says the company reviving the old Anglovaal copper-zinc project. From Moneyweb.

Orion says the Prieska Copper-Zinc Project involves ‘technically challenging tasks very few companies in the world can execute safely’. Image: Supplied

Orion says the Prieska Copper-Zinc Project involves ‘technically challenging tasks very few companies in the world can execute safely’. Image: Supplied

Prieska activist Ronald Februarie rejects the ‘mafia’ label used by Moneyweb against his Siyathemba Business Chamber and Community Forum, following violent protests at Orion’s operations in Prieska in the Northern Cape.

Read: Mining ‘mafia’ wants a piece of Prieska copper-zinc project in Northern Cape

Orion alleged that some protesters wielded semi-automatic weapons, and the violence forced the mine to approach the Northern Cape High Court for an urgent interdict to stop the protest action.

However, Februarie alleges that the interdict targeted many of the wrong people as the individuals wielding weapons were not community members.

“There was a protest across Siyathemba on the 29 April, including outside the mine gates. The black armed response team were not part of the protest, and we don’t know why they saw the need to deploy their guards to an entirely peaceful march,” says Februarie. “But it should also be pointed out that Orion had its own armed guards on site.”

Read: Force majeure at Richards Bay Minerals is a wake-up call for SA

There were also reports of local farmers being stopped and shaken down for money by armed protesters, though who these protesters purported to represent is unclear.

Protest action not limited to Orion

Februarie says Orion was one of several targets of protest between April 29 and May 10.

Other targets include the municipal council and renewable energy companies in the area.

The forum was protesting the lack of community involvement not just in Orion, but in renewable energy businesses located in the area.

In a statement issued to the media, the Siyathemba Business and Community Forum says it has engaged with Orion “to formalise its commitment and statutory obligations towards local doorstep enterprises, as well as the training and employment of locals”.

The chamber wants 30% of procurement going to local contractors and 40% joint venture participation in new business ventures and tenders.

Februarie says Orion has spent over R500 million on contracts “without any meaningful local participation, more specifically by the PDI’s [previously disadvantaged individuals], as defined in the South African Constitution”.

Orion’s response

Orion Minerals CEO Errol Smart says that of the R500 million referred to, only about R230 million was spent, mostly on exploration drilling, mine safety and underground access.

“These are technically challenging tasks very few companies in the world can execute safely in the time that we did,” says Smart.

He adds that the rest of the R500 million was expended on acquisition costs, corporate services (such as feasibility studies, legal and audit services) and financing costs.

Read: Prieska Copper-Zinc project proves SA mining is very much alive

“All our procurement is done in terms of BEE (Black Economic Empowerment) obligations as required by law,” says Smart.

“There is a reason why the Mining Charter gives BEE exemption for prospecting. We are not yet at the point of developing the mine, nor have we raised the capital for this. We would love to spend 30% locally in Siyathemba, we’d love to spend more than 30% locally, but some tasks cannot be fulfilled locally.

“But we have to get the mine going first, and we have to raise capital – and most of the money will likely come from overseas, and we have to demonstrate to these investors that their money is safe in SA.

“We are working on upskilling people, and recently enrolled 42 locals on a machine operator training programme. It takes time to get that going on a sustainable basis. We have a three-year programme ahead of ourselves during which we will train our future workforce before the mine even comes into production,” he adds.

Long-term project

“We are here for the long haul, and unlike the renewable energy construction projects, we are building a mine with the expectation of employing over 900 people for the next 20 years. Still, it will take time and capital investment to get that training done. It also does not help training people long before there is work for them.

“We only need the next generation of miners in two to three years,” says Smart.

“One can’t expect to turn a rural Karoo town 280km from its nearest underground mine into a major mining supply hub overnight.”

He adds: “We had to make safe the old Anglovaal workings, and very few companies in the world can do this work. We also had to find a drilling company that could mobilise 19 drilling rigs and complete the specialist task of deep directional in nine months.

“If we followed the recommendation of Ronald Februarie and the local business chamber, it would have taken us a year just to get the drill rigs organised. We don’t have time for that.”

Orion’s response dismissed

Says Februarie: “Orion’s response is the response of all big companies. The people of this community sit in an area with R13 billion invested in renewable energy and mining projects over the last five years, yet our economic situation remains unchanged.

“Not a single contract valued at R1 million or more has been awarded to local contractors.

“What is the problem? We don’t have the capacity in the local community because local people are employed in low skill functions such as security,” says Februarie.

“These people are not rising through the ranks. They stay as general workers.

“Orion knows it is about to enter into production, so they need to start training workers ahead of time.”

Orion willing to engage

Smart says the mining company is willing to sit down with community members to improve communication channels and lay out plans for community involvement.

“There is no question that our involvement in the area will be good for the community and job creation, and of course, we are going to provide skills training and create new career opportunities for local people.

“We have a problem with demands being made, which are ultra vires [outside the law] that demand that 30% of our procurement and 40% of all tenders and new business are in the form of JVs [joint ventures] with local businesses.

“This is not a requirement in law, and everything we do is in keeping with the law. We are a developing mine, but let us get to the point where we have secured our capital and made a start on the mine.”

Municipality partly to blame, says forum

Part of the forum’s ire is directed at the local Siyathemba Municipal Council, which signed memoranda of understanding (MoUs) with local businesses that fall short of what it says is needed.

“It is also our well-considered view that the current regime of MoUs at the municipality seems to have been signed without proper consultation with stakeholders in our community. This led us to engaging Siyathemba Municipal Council to review all [MoUs] and to ‘break new ground’ on current and future investments in Siyathemba Municipality,” says the chamber in a statement.

The forum says the problems in Siyathemba Local Municipality run deep.

“We are convinced that the municipal management concludes deals on behalf of the community without input from the business chambers and community forums,” it says.

Read: The extent of SA’s municipal problem? R51bn, says Ratings Afrika

“The bigger risk is the nature of the management structure at Siyathemba Municipality. There are no checks and balances to ensure transparency and fairness. This is usually caused by an ineffective and negligent accounting officer who has outsourced his or her duties as accounting officer to individuals and groupings within and outside of an institution.”

Ciaran Ryan

The Writer's Room is a curated by Ciaran Ryan, who has written on South African affairs for Sunday Times, Mail & Guardian, Financial Mail, Finweek, Noseweek, The Daily Telegraph, Forbes, USA Today, Acts Online and Lewrockwell.com, among others. In between he manages a gold mining operation in Ghana, and previously worked in Congo. Most of his time is spent in the lovely city of Joburg.