Rio Tinto’s Palabora signs long-awaited BEE framework with five communities

JOHANNESBURG (miningweekly.com) – Rio Tinto mining company Palabora on Monday announced the signing of a transaction framework agreement (TFA) for a long-awaited black economic empowerment (BEE) deal with five local Phalaborwa communities.

Palabora MD Matt Gili said that the copper-vermiculite-magnetite miner had submitted the TFA to the Department of Minerals and Energy (DME) in Polokwane.

Gili said that Palabora would sell 26% of its operational assets to employees, the community and key individuals, with a significant feature of the transaction being community development.

The five Ba-Phalaborwa communities that signed the TFA are the Makhushane, Selwane, Maseke, Mashishimale and Majeje communities, who would acquire 10 % of the equity, with Palabora providing the vendor finance.

The mining company, Gili added, would also continue to assist local communities within a 50-km radius to become self reliant, 65% of the Palabora Foundation’s R35,9-million 2009 budget going on education.

Palabora’s 2 200 permanent employees would participate equally in the 10% employee share participation trust and a consortium of business people, led by former Palabora chairperson George Negota, would acquire 6 % in exchange for spearheading business development and job creation in the Ba-Phalaborwa area.

Palabora CFO Charles Asubonten described the transaction as “a real balancing act”, with Palabora seeking to meet the Mining Charter’s letter and the spirit well ahead of the 2014 deadline.

Palabora last year paid R235-million in corporate tax and spent R1,1-billion out of a total of R2,6-billion with broad-based BEE suppliers, R964-million in the Ba-Phalaborwa area.

Rio Tinto owns 58% of Palabora and Anglo American 17%, with 25% in free float on the JSE. Palabora mine, which operates a smelter complex, has plans for further expansion of its eight-year-life copper business. When including the magnetite and vermiculite businesses, the combined life of mine is more than 30 years. In 2008, the mine produced 32 000 t of copper a day and a third of the world’s vermiculite. The mine provides South Africa with 85% of its copper requirements.