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EXCLUSIVE: Australian mine takes legal action after SA site raid

Oct 12 2016 11:15
Matthew le Cordeur

Cape Town – Australian mining firm Mineral Commodities Ltd (MRC) said it is taking legal action against the Department of Environmental Affairs (DEA) for what it believes was an “illegally obtained search warrant”, after the department raided its west coast mine Tormin last week.

The DEA and the Department of Mineral Resources (DMR) confirmed that they are conducting a joint investigation into the mine, which is 350km north of Cape Town.

“The department is engaged in a joint compliance investigation on the right-holder, in relation to its environmental obligations,” DMR spokesperson Ayanda Shezi told Fin24 on Monday.

DEA spokesperson Albi Modise told Fin24 on Monday that a “joint investigation was conducted and further investigations are underway in relation to Integrated Coastal Management Act transgressions”.

MRC’s South African subsidiary, Mineral Sands Resources (MSR), which owns Tormin, is the official body instigating legal action.  

“MSR is in the process of challenging the DEA’s illegally obtained search warrant,” MRC chairperson Mark Caruso told Fin24 on Tuesday.

“The competent authority under which the company operates is the Department of Mineral Resources,” he said.

“MSR’s Tormin mine site is in compliance with all environmental and mining regulations,” he said. “As litigation is involved, the company cannot comment any further.”

Allegations of illegal mineral extraction

The investigation likely focuses on Tormin’s alleged extraction of garnet and ilmenite from the beach. This is in “breach of the terms of operation under the licence permission”, GroundUp’s Glen Ashton reported on 1 April 2016.

“In order to do so MRC radically changed Tormin’s mining methodology,” he explained. “The company had been granted permission to pump a concentrated zircon/rutile sand slurry to the processing plant from the beach.

“Instead a far higher impact method was used, trucking beach sand to the remote separation plant. So, instead of removing 5% of the volume of the beach as per the Mines and Works Programme, they were removing nearly 45%.”

Authorities pick up complaints

Ashton reported at the time that while the matter had been brought to the attention of the DMR and environmental authorities, no action had occurred.

By July, however, authorities had been alerted, according to Leonard Gentle, lead researcher in an Oxfam SA project documenting the Wild Coast communities’ conflict with mining projects related to MRC.

“MRC’s Tormin mine on the West Coast is now drawing the attention of the state to the possibility that it infringed environmental conditions and the terms of its mining licence - damaging the coastal environment, according to Environment Affairs Minister Edna Molewa, and expanding the mine without permission and illegally extracting garnet, according to the Department of Mineral Affairs,” he wrote in Business Day.

The Tormin mine on the West Coast. (Photo: MRC)

Tormin performance boost for MRC

Caruso, who is also CEO of MRC, reported a net profit after tax of $10.6m (R151.81m) in May 2016, citing "another solid year of operational performance at the Tormin operation".

"This financial performance, combined with the board's optimistic view of the future key operating and industry metrics, facilitated the decision to declare the company’s maiden dividend of one Australian cent per share," he said in a shareholder presentation.

He said investment in Tormin's garnet stripping plant would strengthen its mining operations.

"The company has also actively pursued an aggressive exploration acquisition strategy, to enhance the current resource by adding considerable exploration tenure to the Tormin operation," he said.

MRC seeks more mineral on West Coast

Tormin has endured ongoing labour disputes that resulted in court cases, violence and pay cuts after it started operations in 2014.

In November 2015, the DMR awarded MRC with a prospecting right to explore further mining opportunities near Tormin.

Caruso said in March 2016 that he expected a “drilling and sampling programme on its newly acquired Western Cape prospecting right to be completed within the first half of the year”, according to Mining Weekly.

Caruso said the results of the prospecting right would “support the extension of Tormin’s current mine life and rate of production, which is about 1.5 million tonnes a year”, Mining Weekly explained.

Caruso pulls out of Wild Coast mining

The investigation is a further blow to Caruso’s mining vision in South Africa, after he announced in July the sale of MRC’s 56% stake in Transworld Energy Resources (TEM), according to Mining Weekly.

The sale occurred after the Xolobeni community blocked TEM’s decade-long attempt to conduct mining prospecting for titanium on the Wild Coast in the Eastern Cape.

That mining licence was subsequently placed on an 18 month moratorium by DMR Minister Mosebenzi Zwane on 18 August 2016 due to “significant social disintegration and a highly volatile current situation in the area”.

Zwane applied Section 49 (1) of the Mineral and Petroleum Resources Development Act to stop TEM’s mining application and to prevent it from starting further prospecting or mining applications in the area.

This followed the alleged assassination on 22 March 2016 of Sikhosiphi “Bazooka” Rhadebe, the head of the Amadiba Crisis Committee that fought against the mining process.

READ: Mining’s ugly underbelly

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mrc  |  mining

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