Richards Bay seals R4.5bn BEE deal
RIO Tinto and BHP Billiton have finalised their long-awaited R4.5-billion empowerment deal - the largest BEE transaction in KwaZulu-Natal.
The deal will see local communities taking up shareholding in a new empowerment company, Richards Bay Minerals (RBM), and earning R3-million a year in dividends and corporate social investment spend.
RBM said in a statement on Friday that the 26percent stake sold to the Richards Bay communities took years to finalise.
The four host communities, who include the Sokhulu, Dube, Mbonambi and Mkhwanazi clans, will not be required to pay upfront for their stake in RBM - the companies said funding arrangements were still being finalised.
Each host community will set up a public benefit trust to facilitate development projects in each area.
The companies have undertaken to make one-off payments of R17.5-million to each community's trust on completion of the transaction.
RBM's 1750 permanent employees will be allocated 2percent of the 26percent stake - the remaining 24percent will be held by lead investors, together with the communities.
Lead investors include the Imbewu Consortium, Matasis Investment Holdings, Gade Investments, Sambulo Investments, South African Woman Alliance, Ungoye Investments and Bingelela Investments Consortium.
The interests of the communities and lead investors will be held through a special purpose company, BEE Holdco, created specifically to hold their interest in RBM.
The lead investors will hold a 55percent interest in BEE Holdco, with 45percent going to the communities.
Cameron McRae, managing director of RBM, said the company was already supporting empowerment companies.
"[Last year] RBM spent R3.1-billion with suppliers, many of whom were small, black-owned enterprises.
"This year, R1.2-billion was spent procuring from BEE ventures and R81-million was spent with businesses from the four communities.
"RBM has been a key generator of employment [in KwaZulu-Natal] and will continue to do so over coming decades," McRae added.