/ 4 May 2007

‘Bring machines, and we will fight’

A potentially violent backlash looms in Pondoland over efforts by an Australian company to persuade villagers to back controversial plans to mine an environmentally sensitive strip of the Wild Coast.

The department of minerals and energy is processing an application by Australia’s Mineral Commodities (MRC), its South African subsidiary Transworld Energy and Mineral Resources and BEE partner Xolobeni Empowerment Company (Xolco) to mine the Xolobeni dunes south of Port Edward.

The mining lease area comprises five tenements between the Wild Coast Sun and Mkambati Nature Reserve.

The application has outraged environmental groups, largely because the tenements form part of the Pondoland centre of endemism, which has more plant species than the United Kingdom, some of which are endemic and facing extinction.

Mining law requires applicants to outline community benefits and backing in their social and labour plans.

In a notice posted on the Australian stock exchange MRC claims ‘unanimous support” from the five affected Pondo communities, known as the Amadiba, which are among South Africa’s most impoverished and isolated groups. A survey found unemployment rose from 65% in 2001 to 71% last year, only 2% of villagers have grade 12 education and 88% live below the poverty line.

Exploratory drilling revealed Xolobeni has the world’s 10th largest titanium deposit, worth about R11-billion. Capital expenditure over the mine’s 22-years, including a downstream smelter, is estimated at over R1,4-billion. MRC predicts 570 direct jobs will be created.

But at least two communities fiercely oppose the mining plans. At a recent meeting at Sigidi village and a smaller meeting at Mtentu estuary, villagers unanimously rejected it. Some opponents are former miners who fear Gauteng’s mine dumps and compounds will be replicated on the Wild Coast. Others are former employees of defunct eco-tourism ventures who blame MRC’s local agents for their demise. Many are suspicious of outsiders.

The villagers complained that MRC’s empowerment structure, Xolco — set up to ensure they benefit from the mineral wealth — is controlled by politically connected business leaders intent on feathering their own nests.

Intimidation of opponents is also alleged, with independent sources confirming the villagers’ claims of death threats. Headman Mandoda Ndovela was shot dead after his outspoken criticism of the mining at a meeting at the Pondo king’s great place outside Lusikisiki in 2003. Police found no evidence linking his murder to the mining dispute and the case remains unsolved.

When speaking to the Mail & Guardian villagers alleged that Xolco agents had used Ndovela’s death as a scare tactic. ‘They tell us we will die like him if we are against this thing [mining],” said one.

They added that MRC attempts to win over opponents by offering community leaders Xolco directorships were causing deep divisions.

One former mining opponent and now a Xolco director, who did not want to be named, said directors were only compensated for expenses but would ‘get money when the mining takes place”.

Mzamo Dlamini, a youth living in an affected village, said 10% of the Amadiba ‘who were promised riches by the mining company” support mining. ‘The rest say if people bring those machines, we will fight.”

Referring to South Africa’s most famous apartheid-era rural uprising, Jabulani Mboyisa warned: ‘Remember what happened in 1960? This will be a big war — a second Pondo uprising — finish en klaar, broer!”

MRC managing director Mark Caruso dismissed allegations against Xolco as fabrications by green lobbyists. ‘If provided with evidence that criminal acts were carried out on behalf of MRC, it would be regarded in a serious light and passed on to the authorities to investigate,” he said.

The local Mzamba police station said it had received no intimidation complaints.

Xolco is crucial to MRC’s mining rights application. MRC announced last year it had reached BEE compliance by raising Xolco’s stake from 19% to 26%, potentially worth R130-million.

Xolco, punted as a community empowerment vehicle, is supposed to disburse mining revenue to 10 trusts representing different interests at Xolobeni and surrounding areas. But there are no guarantees that its earnings will filter down to communities.

MRC’s Caruso said 60% of Xolco’s dividend stream would go towards paying off its own stake and 40% dispersed ‘as they [Xolco’s directors] see fit”.

But until recently Xolco’s only directors, who owned a controlling stake, were Port Elizabeth lawyer Max Boqwana and local business leader Zamile Qunya — a senior ANC councillor and close associate of OR Tambo district municipality mayor Zoleka Capa, who has jurisdiction over most of the Wild Coast.

When appointed Xolco director in 2003 Qunya also headed Accoda, a community development trust intended to drive an ambitious eco-tourism project, including a 60-room hotel, estuary resorts and residential stands. The deal fell through amid claims that Qunya pressured Capa to block it because he feared jeopardising his mining interests. Capa did not respond to a written query.

Qunya claimed he had no influence over council decisions, no longer owned a stake in Xolco, had received no director’s fees, and was promised no future benefits. ‘If the mining goes ahead I will act as a facilitator between the mining company and government if they appoint me in an open tender process — that’s all,” he said.

Xolco chairperson Nomangesi Malunga refused to respond to detailed questions about how mining funds would be distributed, whether directors would receive share options, and whether Xolco and the trusts would follow corporate governance rules providing for the removal of directors or trustees with conflicting interests.