The Richtersveld community and state-owned diamond miner Alexkor have concluded a framework agreement that lays out terms for the settlement of the massive land claim launched in 1998 against the company.
In terms of a memorandum of understanding signed by representatives of the claimants and the company, the community will get a large stake in Alexkor, a royalty on future diamond production and the return of title to all the land — about 84 000ha — expropriated from it in 1920 to make way for mining.
In addition to a deal on land and shares, a cash grant may be provided to get new agricultural projects going in the desperately arid and thinly populated region.
“The basic thing is to give the community a very significant stake in the company, and they’ll get the land back … I think it is an exceptionally exciting framework for settlement,” Public Enterprises Minister Alec Erwin told the Mail & Guardian in an interview following Trevor Manuel’s Budget speech on Wednesday.
The government, which had originally sought to partially privatise Alexkor, will now remain the community’s partner “for the foreseeable future”, Erwin said.
“There is still a lot of work to be done — it is not final,” said Willem Diergaardt, a spokesperson for the Richtersvelders, who confirmed the outlines of the settlement.
The claimants had until recently sought not only the return of the land, but had asked the Land Claims Court to award damages of R2,5-billion for environmental degradation caused by mining and for the diamonds removed so far.
The government had been fighting- the case because of concerns about setting a precedent for claims on land expropriated by other parastatals, and because ongoing negotiations limited its scope for privatisation at Alexkor.
But Alexkor is close to insolvent, and one crucial element of the deal that requires substantial work, according to both Erwin and the claimant’s attorney, Henk Smit, is the recapitalisation of the company, which has regularly recorded losses in recent years, and is short of cash to keep operating, let alone to fund investment in urgently needed equipment.
The value of the settlement hinges on Alexkor’s ability effectively to exploit its resources — particularly marine diamonds.
Revenue fell 42% in the nine months to March last year, and losses were R24,5-million in the first half of 2005/06. According to the estimates of national expenditure released with the Budget, “Alexkor will be technically insolvent by March 2006 if this loss-making trend continues”.
It is not clear how much cash will come from the government, but talks with other diamond miners in the area are ongoing.
“We need to exploit the synergies with Transhex, which is nearby,” Erwin said. Transhex uses slightly different, but not completely incompatible equipment, which is one source of possible collaboration.
Smit was more cautious: “I don’t think we should be bringing the names of other mining companies into it at this stage, there is still a lot of work to be done.”
No recapitalisation would be possible while the claim remained unresolved, Erwin explained. He would not be drawn on the details of a possible approach.
The claimants were also reluctant to discuss figures, saying they did not want to jeopardise the settlement. No specific provision is made for a deal of this nature in the Budget, but Erwin said some of the cash to put Alexkor back on its feet could come from the R15,5-billion in contingency reserves set aside by Manuel over the next three years.