A threatening letter, a derailed train, blocked roads, burnt vehicles, workers locked up... these are what some of the world’s biggest mining companies say they are battling in one of South Africa’s worst scourges: extortion. | City_Press
Bloomberg interviewed more than a dozen mining executives, contractors, government officials, politicians and protesting groups, and reviewed threats received by firms to show why extortion – coming on top of onerous local ownership rules, fractious labour unions and erratic power supplies – is turning South Africa into a less attractive destination for investment.
Last month, a train derailed on the main export route for coal miners, with the state-owned logistics firm Transnet saying the incident had occurred “against a backdrop of threats and disruptions to the company’s operations by disgruntled groupings seeking business opportunities”. At Sibanye’s K3 platinum shaft, about 15 workers with a mining contractor were locked up for 12 hours in May by a local politician who gathered about 100 young people to demand jobs at the mine, said a spokesperson for the company.
“This is definitely the final nail in the coffin of investment,” says James Lorimer, the DA’s shadow minister for mineral resources. To top managers at Impala, the letter – a copy of which was obtained by Bloomberg – was an effort to make it redirect some contracts to Banaef members via a veiled threat from Executive Outcomes, which in the 1990s helped governments in Sierra Leone and Angola fight armed rebels.
Executive Outcomes’ website carries an image of a man wearing combat gear in a tank and makes no mention of audit services. Its CEO, Eeben Barlow, declined to comment. Banaef officials said they were unaware of Executive Outcomes’ militia background. There is little economic activity other than mining in North West, where much of the country’s platinum and chrome lies. Roads are dusty and potholed and settlements are ramshackle, often boasting little more than a church, a liquor store and a pawn shop. Government – which faces a party election this month and a general election in 2024 – is pushing mining companies to buy more goods and services from firms owned by black South Africans.
While black-owned companies’ participation in the sector has increased, many smaller firms are still excluded because they simply cannot afford the machinery and equipment required, says Jonathan Leso, executive director of African Sun Mining, a black-owned contractor. That said, black businesses are also often targets of the gangs, he adds.
Security guards have been hospitalised after being beaten up, vehicles and guard cabins have been set on fire, and procurement staff have resigned after being threatened, say mining companies.
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