The impoverished community, which government dispossessed of its land in the 1920s, now has a 49% stake in Alexkor’s Alexander Bay operations, just south of the Namibian border, and will welcome development grants of R240-million over the next three years.
What makes this agreement, in Public Enterprises Minister Alec Erwin’s words, a “great occasion after an amazing legal battle” is that both parties have a reason to celebrate.
The Richtersvelders get reparations for their land seized some 80 years ago, and can look forward to a sustainable future, while Alexkor will now have the confidence to embark on a life-breathing, up-to-R200-billion, recapital-isation programme.
“Justice is finally being served,” Richtersveld Development Company chairperson Piet Cloete enthuses.
“We are very proud to get our land back.”
Brave battle The landmark agreement came as a result of a brave battle that the Richtersveld community has fought, since first lodging a claim for the land in 1998.
Since then, the dispute has passed through the Land Claims Court, the Supreme Court of Appeal, and finally South Africa’s highest court, the Constitutional Court, in 2003.
However, government was reluctant to provide much-needed capital to Alexkor until it had clarity on the future of the company’s oper- ations, leading it to seek a settlement agreement with the community.
The settlement avoided further court tussles, which could have pushed a possible resolution even further down the line, jeopardising Alexkor’s already rickety financial position.
The community and Alexkor signed an accord on April 22, which gave the Richtersveld community 49% of Alexkor, and the State, 51%, as well as reparations payable to the community.
Importantly, the agreement also gave the State’s mining rights in the Alexander Bay area over to the Richtersvelders, subject to the Department of Minerals and Energy’s (DME’s) approval.
The culmination of the past ten years’ dispute came to a symbolic end in a ceremony held in the area on December 1, when Erwin and Land Affairs Minister Lulu Xingwana handed over the deeds to the land to the Richtersveld leaders.
Central to the community’s victory was public law firm the Legal Resources Centre (LRC), which Erwin praised for having done “an excellent job”.
Unfortunately, the LRC pulled out of representing the community earlier this year, after it wanted clarification on certain ‘vagaries’ in the agreement, while its client was satisfied with the accord as it stood.
It had served the Richtersvelders for as long as 14 years.
Erwin says that, while giving the mining oper- ations at Alexander Bay a new lease on life was an immediate priority, to which government would contribute up to R200-million over a year or two; agriculture, mariculture and tourism industries in the area would also see significant amounts of money heading their way.
Part of the agreement was that the State would pay a Richtersveld community trust R190-million in three instalments over as many years.
Much of this cash would go to develop- ing these industries, thereby creating jobs and stimulating the local economy.
The Richtersveld area has citrus, oyster, and ostrich farms.
Erwin is also quick to draw attention to the vast tourism potential of the region, which has largely been untapped.
Over and above the R190-million figure, the community will soon also be taking receipt of R50-million, which it will use to boost its farming, mariculture and tourism sectors.
Cloete says that this will bring about huge economic change not only to the Richtersveld land, but also to the surrounding communites.
Over 2 000 Richtersveld community members stand to directly benefit from the settlement.
Alexkor, through its trading arm, owns four farms along the lower Orange river that includes what is one of the biggest ostrich farms in the Northern Cape, a dairy farm that provides dairy products within a radius of 600 km, a cheese factory, lucerne fields and citrus plantations.
Another possible job generator for the area that has not been discounted is the beneficiation of the diamonds mined there.
While Erwin points out that it would be premature to say that there are plans afoot to promote diamond beneficiation in the Richtersveld, he also states that it will be “interesting” to see if government could do this directly in Alexander Bay.
“I’m sure that the community would also be interested to try to do that too,” he tells Mining Weekly.
Cloete says that the community has loooked at this, but not in great depth. He comments that Alexkor could work with nearby miners, including Trans Hex and De Beers, to establish a cutting and polishing centre, but if others built similar facilities in the Northern Cape, it would not be worthwhile.
Erwin stresses that it is government’s plan to both mine and prepare for the longer-term future. However, right now, the sustainability focus lies primarily in farming and tourism.
Something that could put a dampener on the possibility of developing a diamond-polishing and -cutting industry in the Alexander Bay area is that the land mining operations only have 10 to 20 years of resources left.
However, the marine operations have enough diamonds to last longer than this.
Also, government announced in February that it had agreed to merge Alexkor’s West Coast operations with those nearby belonging to the biggest producer in the world, De Beers.
De Beers MD Gareth Penny said at the time that the transaction would allow the two parties to benefit from synergies that existed in the area.
A bigger set of assets with more production could make a stronger case for diamond bene-ficiation to occur there.
It must be mentioned, though, that De Beers’ making this announcement while the sensitive negotiations between the Richtersveld community and government were under way nearly caused a significant upset.
The community felt at the time that government had bypassed it, when the Department of Public Enterprises (DPE) failed to notify it of the De Beers deal.
However, the Minister was quick to reassure the Richtersveld people that the deal would have no impact on them, leaving the air cleared.
Cloete says that the community is still in the dark over this issue, but is not worried about what will happen here.
De Beers spokesperson Tom Tweedy says that the firm is still keen on the merger, and that it will be “the next thing on the horizon for the new year”.
Tweedy says that De Beers has “been looking at ways to sustain the economic viability” of the operations, which, at a 900 000-ct/y production, are “sizeable”.
Nevertheless, a source close to Trans Hex, which has expressed interest in buying the Namaqaland mines, says that the industry is highly politicised, and De Beers may yet sell the oper-ations, despite what the firm says.
The person, who spoke on condition of anonymity, believes that Trans Hex would certainly be interested in the asset, should it become available. It is unclear how this would play out with an Alexkor merger.
Concerning beneficiation, though, Alexkor says that it has taken a “strategic decision to be the base-load supplier” to the State Diamond Trader (SDT).
The SDT is currently being formed, in an effort to encourage local gem cutting and polishing, and will buy 10% of the country’s raw diamond production to sell to local beneficiators.
While government controls the trading company, De Beers has agreed to help set it up and manage it, free of charge.
Alexkor had been struggling financially, and needed to reposition itself through significant recapitalisation.
In the year ended March 2006, it reported an operating loss of R38,2-million. During the same period, it produced 43 000 ct, which was the lowest production in its recent history.
“We’ve had to cut back on mining operations at Alexkor because of the uncertainty, and also because the State was not able to capitalise in the absence of an agreement,” Erwin states.
“Now, with the agreement, the joint board is responsible for devising an immediate business plan – there’s a lot of detail to be effected, including the transfer of workers and the appointment of a contractor,” he adds.
The transfer of the mining rights could take up to a year, Erwin notes, saying that the DPE has full cooperation from the DME.
“Just one week ago, the two principals gave the interim joint board a mandate as to what to do, so things will be moving,” he says.
Erwin also explains that the Richtersveld community could take up Alexkor’s shareholding in the mining operations at some point in the long term. It also has the first right of refusal to Alexkor’s marine mining rights.
Now all that is left for the Alexkor/Richtersveld union is to turn the Alexander Bay mining operations to profit.
In the end, a 49% loss-making stake is worse than none at all.
But, in the meanwhile, the Richtersvelders are rejoicing. “There has never been a victory like this before,” Cloete states.
He concludes that the settlement injected new inspiration into the community on a group, as well as a personal, level.