Construction of the biggest platinum mine planned since 1993 is being delayed because of an impasse between billionaire Robert Friedland’s Ivanhoe Mines Ltd. (IVN) and South Africa’s mines ministry over the extent to which local communities will benefit.
South Africa’s Department of Mineral Resources delayed authorization to start building the $1.6 billion Platreef mine by 12 weeks to a target date of Nov. 26, saying some elements of the company’s plan to benefit the surrounding community were “sketchy” and did “not offer much,” according to an Oct. 2 letter sent to Ivanhoe and seen by Bloomberg. The department said its demands were “not exhaustive” and it may request “further clarification” before it gives the go-ahead.
Ivanhoe Chief Executive Officer Lars-Eric Johansson said in an Oct. 9 response to the mineral resources department, a copy of which Bloomberg has obtained, that “We believe that each and every formal request by your department to date has been accommodated.”
The department’s demands come amid opposition by some groups from one of South Africa’s poorest communities in northern Limpopo province over how Ivanplats, the Vancouver-based company’s local unit, brokered a deal to sell community members a stake in the project to meet government requirements.
South African mines minister Ngoako Ramatlhodi has asked to meet Friedland to resolve issues, the department said Oct. 30 in an e-mailed response to questions. The department “cannot ignore complaints from the community and is duty-bound listen to the communities and address their concerns,” it said.
Job Cuts
“The Department regrets the leakage of correspondence with Ivanhoe wherein fundamental regulatory issues are distorted and trivialized,” it said. The department said it “has not delayed the issuing of the mining right” and the minister is seeking a meeting with Friedland to resolve the issues.
Ivanhoe said it can’t comment on correspondence with the ministry because it’s confidential.
The company said on Oct. 15 it took a legal step allowing it to consider cutting 325 jobs at Platreef while it awaits a definitive date for the mining-right approval — the final notary hurdle before it can start digging the mine.
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