Awkward questions get short shrift at MRC AGM

Australian mining company Mineral Commodities Limited (MRC) had a rough ride at its annual general meeting in Perth last week.

Though the 2017 results were much improved over the previous year, more than 25% of shareholders shot down the group’s proposed remuneration report, which would increase executive pay. In terms of Australian company law, this is considered a ‘first strike’ against the board. A second strike could result in the board having to resign.

Things also got testy when environmental activist Louis de Villiers, a South African now resident in Australia, challenged the group’s reporting on its SA mining activities and questioned the annual report’s silence over the multiple defamation suits launched last year against SA social activists protesting the group’s environmental and social practices.

Peter Torre, MRC’s company secretary, brushed this off and asked if there were any more questions.

Yes, said de Villiers: “I requested clarification of what seemed like a contradiction in the annual report where the company says it is divesting from Xolobeni [a stalled mineral sands project on the Wild Coast], but at the same time appearing to remain interested in the potential of this mine.”

It seemed like a valid question. The annual report says the company is in the process of selling its interest in Xolobeni, but “fully supports the ongoing development of the Xolobeni Project and its decision to divest is in no way a reflection of its commitment to its mining interests in South Africa.”

De Villiers later pressed the point about the defamation suits, and whether this might be detrimental the MRC’s public image if it is seen to be silencing opposition to its mining activities. MRC CEO Mark Caruso replied that the company believes in free speech and transparency, but had endured 16 years of sniping and negativity and wanted to bring this to an end. Several of the activists contacted by Moneyweb say they are determined to haul this matter before court to test the limits of free speech and defamation, particularly where corporations are involved.

Moneyweb previously reported on the defamation cases against six activists. All six are defending the cases, claiming they are nothing more than SLAPP suits (Strategic Lawsuit Against Public Participation) intended to censor, intimidate and silence critics by burdening them with the cost of a legal defence until they abandon their criticism or opposition.

The defamation cases are being brought by both MRC and Caruso. Two of the cases relate to public remarks by social worker John Clarke and activist Mzamo Dlamini for supposedly alleging the company was involved in the murder of Pondoland community organiser Sikhosiphi ‘Bazooka’ Rhadebe, who was gunned down in 2016 by unknown assailants. Both activists deny making this allegation. Environmental lawyer Cormac Cullinan is also being sued for defamation for claiming in a radio interview that the company was buying off certain traditional leaders to push through its Xolobeni mining application on the Wild Coast. Cullinan is defending the case on the grounds that his comments were substantially true and in the public interest, and therefore constitute protected speech. MRC has made 18 defamation claims against Clarke, with a potential fine of R5 million. Clarke says his work obliges him to uphold the bill of rights, including the rights of the privileged, such as mining companies and shareholders.

Three more activists are being sued for alleging poor environmental practices by the company’s Tormin mineral sands project on the West Coast. Centre for Environmental Rights attorneys Tracey Davies and Christine Reddell, and community activist Davine Cloete, made the statements during presentations at the University of Cape Town in January last year. They expressed concerns about the legality and environmental impacts of the Tormin mineral sands mining operation.

A peculiarity about these cases is that MRC admits in its annual report to “non-authorised activities under SA’s National Environmental Management Act”, yet still seems intent on pursuing its defamation claims against the activists. Caruso told de Villiers that the company is confident of regularising matters at Tormin, and is in the process of applying for an extension of its prospecting rights to the north and south of the current site.

Virtually all of MRC’s income is derived from its 50% share in the Tormin minerals sands project located 400km north of Cape Town on the west coast. The company has been trying to get a second project off the ground at Xolobeni on the Wild Coast, but the Department of Mineral Resources last year imposed a moratorium on the award of mining or prospecting applications in the area for 18 months pending the resolution of conflicts between pro- and anti-mining groups.

Sanral has started work on the N2 toll highway along the Wild Coast, though this too faces opposition from communities in the area, which claim the road is being built largely for the benefit of the Xolobeni mineral sands project.

Tormin on the west coast has to date been the cash engine for the group, funding new projects in Western Australia and Iran.

Caruso says the company had difficulties getting its product to port by rail, and negotiations with Transnet would hopefully improve this. It plans to enhance revenue by beneficiating its concentrate into finished product.

For all this, the results were impressive: after tax profit was up 262% to Au$9.9m (R96.7m) and revenue was up 230% to Au$60.9m (R593.2m). Much of this improvement was due to better prices for its high grade non-magnetic zircon/rutile concentrate. MRC hit something of a sweet spot with roughly 45% year-on-year price increases for its non-magnetic concentrate.

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