The clock is ticking for the Rio Tinto-owned Richards Bay Minerals (RBM) in northern KwaZulu-Natal to fork out millions in withheld royalties to four traditional councils. The company mines titanium and other precious minerals needed by the global tech industry.
The decision comes after the company lost a case in the Pietermaritzburg High Court, where it wanted to be granted an order to change the structures of the trusts where it pays the community dividends, citing several matters.
Among the issues was the governance of the funds that are paid for development purposes and their composition, which included some members of the royal families of the Mkhwanazi, Dube, Mbonambi, and Sokhulu clans.
The company argued that the involvement of amakhosi and royal family members resulted in poor governance, and royalties were withheld.
However, the court differed and said the issues of governance were because some trustees had failed to perform their fiduciary duties, not because amakhosi (chiefs) were involved.
“Because of the significance of the role of amakhosi as traditional community leaders, they were required in terms of the trust deeds to appoint trustees, which is in line with the governance and leadership structures of the host communities, also recognised in the KZN Act.
“The trust instruments were drafted by the applicants through their attorneys, incorporating all the agreed provisions. The applicants were aware of the KZN Act.
“The consequences are accordingly not unforeseen, as there is no change in circumstances resulting in consequences which were not intended by the founders, as is the position with the case law relied upon,” the court ruling reads in part.
In their submissions to the court, the trusts disputed that RBM and sister companies have been engaging with the trusts since 2011 regarding concerns in relation to the general governance of the trusts and management of the trust property.
The trusts said the engagements began in 2020, but there is no proof of how the processes were run or the funds managed from 2011 to 2020.
The court ruled that the trust rules did not interfere with the goals of the trusts to buy and keep the shares and other assets for the benefit of the beneficiaries of the development trusts, and to use the trust assets for public benefit activities for the beneficiaries of the public
benefit trusts, so it rejected RBM’s request and ordered them to pay costs.
“The impugned provisions of the trustees do not prejudice the trusts. The reason is clear, as amakhosi are themselves beneficiaries. The impugned provisions do not undermine public interest, and the only threat to the empowerment transaction and the interest of beneficiaries is the withholding of funds by the applicants.”
RBM said it was studying the court judgment.
“Richards Bay Minerals remains committed to trust reform with principles of good governance as a critical enabler to deliver tangible, long-term benefit to the communities where we operate.
“We are reviewing the judgement to determine a pathway forward,” the company said.
