Ivanhoe drills into mistrust at Platreef

Secret payments and confusion about who benefits from resource extraction have bred mistrust between communities, traditional authorities and a company that intends to mine in Limpopo.

As a result, the newest frontier of mineral resource extraction in Mokopane, in Limpopo, is slipping into chaos as some community members have vowed to stop the $1.6-billion (R18.4-billion) Platreef project from going ahead.

Several people were injured in running battles with the police recently after they tried to stop Ivanhoe, which secured the mining right for the project early last month, from bringing equipment onto the site.

Some communities have accused billionaire Robert Friedland, chairman of Ivanhoe, of using "underhand tactics" to get access to their mineral-rich land. Ivanhoe owns 64% of the Platreef project, a Japanese consortium including Itochu Corporation owns 10% and the balance is held by broad-based black economic empowerment partners.

Community member Aubrey Langa, an adviser to the Mokopane Interested and Affected Community, wrote to Friedland last month saying: "By wanting to within 21 days start with commencing operations on our communal land, you are not only flouting territorial rules but you are also peeing on the graves of our forefathers."

It has emerged that Ivanhoe, which plans to build what is expected to be the world's biggest platinum project next to Anglo American Platinum's sprawling Mogalakwena mine, signed an agreement with local chief Lesibana Kekana and several mining committee members to pay them incentives in exchange for their facilitating prospecting on communal land.

In the surface use cooperation agreement during the prospecting phase the company offered to:

Pay Kekana an after-tax monthly stipend of R30000, plus a once-off amount - to be determined by Ivanhoe - into a trust of his choice and to provide him with a laptop;

Give Kekana use of the farm Uitloop, at a nominal rental of R1 a month, contribute to services of up to R1500 a month and cover security costs and to contribute to Kekana an undisclosed amount in annual gratuity at year-end.

Kekana could not be reached for comment. But Ivanhoe spokesman Jeremy Michaels said R30000 was reasonable remuneration for the time Kekana spent on company activities. This included facilitating meetings with Mokopane traditional authorities and communities, advising on cultural requirements and standards for consultation, the appointment of service providers, catering and heritage-related matters. He said the laptop was for company activities and no money was paid into a trust account.

The company also paid his adviser David Kekana R3000 a month, R30000 to the Tshamahansi community mining committee, R10000 to the Magongoa community mining committee and R3000 each to four traditional leaders.

Michaels said these payments were entirely reasonable remuneration for time spent on tasks related to company activities and to help ensure communities were kept adequately informed.

"For example, the leaders were required to help notify communities of public meetings to assist in ensuring the mealie field compensation was paid to the right people and to assist with queries and grievances involving these payments," he said.

The "mealie field" payments of R5250 per family were made by the company to those whose properties were directly affected during prospecting.

Although the wider community benefits are unclear, the agreement also makes provision for Lesibana Kekana to identify schools to benefit and further promised payments for security during the drilling phase.

Michaels said this was a practical arrangement because the company did not have sufficient knowledge about the area and had to rely on traditional and community leaders for assistance. It is routine for a company to provide a level of security to safeguard an asset such as a drill rig and related equipment.

Now that the mining right has been granted, the agreement with Lesibana Kekana and others is being renegotiated. But the payments in the prospecting agreement have left a bitter taste for some community members.

John Capel, executive director at the Bench Marks Foundation, said that at face value the incentives bordered on bribery and were meant to bypass community consent to get the social licence to mine. "The company should have consulted all community structures so that there would not be discontent within the community," Capel said.

But Peter Leon, head of mining regulatory practice at law firm Webber Wentzel, said the key issues in this regard were what these services were for and what the traditional leader's role was in relation to the community. The payments could not be regarded as illegitimate unless these facts were established or known, he said.

"The second question is what the traditional leader has advised the community in respect of these payments. If the community is unaware, that would be a concern."

Michaels said the surface use cooperation agreements were meant only for prospecting and were never intended to continue indefinitely. Given the recent granting of the mining right by the Mineral Resources Department, the company was now planning negotiations with the Platreef project's host communities and the Rural Development and Land Reform Department for a long-term surface lease agreement, Michaels said.

This will include a review of potential losses to agricultural land and effective measures to mitigate these effects.