Rio Tinto Declares Force Majeure in S. Africa After Violence

(Bloomberg) -- Rio Tinto Group declared force majeure on customer contracts at Richards Bay Minerals after escalating violence forced it to suspend activity at the minerals sands operation in South Africa.

Managing Director Werner Duvenhage said the company is prioritizing the safety of its 5,000 workers at RBM, which exports titanium dioxide slag, used to create ingredients for products including paint, plastics, sunscreen and toothpaste. The closing of Rio's only South African business follows the death last month of RBM manager Nico Swart, who was shot on his way to work.

“It has become impossible for us to run the business,” Duvenhage said by phone. “We won't go back until it's safe for our people.”

The suspension of operations at RBM is a blow to the South African government's efforts to attract new investment. Violence around RBM forced the operation to shut temporarily in 2019, with work subsequently halted on a $463 million expansion project.

In recent weeks, mining equipment and infrastructure have been destroyed and access roads blocked. South Africa mining operations frequently are dogged by community protests, which relate to issues ranging from poor municipal services to labor conditions. Duvenhage said there have been reports that the latest violence may be connected to youth unemployment.

The violence around mining communities, including the burning of equipment and the intimidation of mine workers, hurts South Africa's reputation as an investment destination, said Minerals Council South Africa, an industry lobby group for bigger producers.

“The closure of mining operations due to security concerns negatively impacts on production, employment and investment, and will ultimately have severe adverse economic and social consequences,” the council said in a statement.

RBM's furnaces are currently being run on low power as they can't be shut down completely. The company is engaging with both regional and national governments to get a better understanding of the cause of the violence, Duvenhage said.

South Africa's mines and energy ministry didn't respond to a request for comment.

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