Controversy follows colourful Australian mining magnate

Australian mining executive and entrepreneur Mark Caruso has quite a reputation. He heads Perth-based mining company Mineral Commodities Ltd (MRC) that has two business interests in South Africa: a proposed ilmenite mine at Xolobeni on the Wild Coast in Pondoland, and the other a working mineral sands mine, Tormin, on the West Coast.

Both projects have proved, and remain, highly controversial, and it’s not unfair to say that his reputation is something of a curate’s egg.

MRC enthuses on its website that Caruso has “extensive experience in all disciplines of mining, earthmoving and civil engineering construction earthworks through his generational involvement with his family-based contracting business”.

It cites his “proven track history of project discovery, delivering and financing projects from exploration through construction into operation in developing and emerging countries on time and on budget”.

The website of another company of which he is a director (Connexion Media, a company “revolutionising smart car technology for the automotive industry”) describes him as “a successful executive and entrepreneur with a strong, transferable business acumen” with “substantial corporate experience driving growth and creating value in small companies”.

It’s from carefully scripted corporate environment paeans like this that Caruso derives much of the good part of his reputation.

Elsewhere, he gets a more varied scorecard.

SLAPP cases and scripture

Caruso first came to the attention of many South Africans through MRC’s strongly contested, and as yet unsuccessful, attempt to mine the ilmenite-bearing sands at Xolobeni, through its local subsidiary Transworld Energy and Mineral Resources. Ilmenite is a black iron-titanium oxide, the primary ore of titanium.

This proposed project, already way longer than a decade in the planning, has created deep divisions within the Amadiba community of Xolobeni, many of whom will have to relocate if the mine is approved. It’s also been marred by violence, intimidation and murder.

In what is widely believed to have been an assassination because of his uncompromising views, anti-mining activist Sikhosiphi “Bazooka” Rhadebe was gunned down at his home in March 2016 by two men posing as policemen who fired eight shots into his head.

Despite the Hawks becoming involved in the investigation, no arrests have been made.

Unsurprisingly, MRC, which repeatedly denied inciting violence among its supporters at Xolobeni, issued a statement saying it was “in no way implicated in any form whatsoever in this incident”. This was the company’s response to allegations on the matter from several quarters, including AmaMpondo royal spokesperson Chief Mandilize Cinani while speaking at Radebe’s funeral, the Eastern Cape newspaper The Weekend Post reported.

Caruso told the Australian Broadcasting Corporation that such claims were “simply unfounded”.

“The company is not in a position to comment with any authority on the incident,” he said. Its own internal inquiry had found no more information than had been reported. The company would not engage in any violence, and would “cooperate fully with any investigations into this incident”.

But an earlier incident involving Caruso, comprehensively detailed in a report in South Africa’s Sunday Times in November 2015 titled “Aussie company threatens ‘biblical smiting’ in ongoing Cape row”, describes a rather more belligerent attitude than those later comments conveyed.

The newspaper published details of an email Caruso had sent earlier that year to “local stakeholders” in the Tormin mineral sands mining venture that is operated by another of MRC’s South African subsidiaries, Mineral Sands Resources (MSR).

According to this report, Caruso had turned to the Scriptures to admonish his opponents, threatening to “rain down vengeance” on anyone who opposed him at Tormin, and quoting a biblical passage made famous by a pair of assassins in Quentin Tarantino’s ultra-violent movie, Pulp Fiction.

“From time to time I have sought the Bible for understanding and perhaps I can direct you to Ezekiel 25:17,” Caruso wrote in his email, before citing the full verse that includes the lines: “And I will strike down upon thee with great vengeance and furious anger, those who attempt to poison and destroy my brothers. And you will know my name is the Lord when I lay my vengeance upon thee.”

Elsewhere in his e-mail, the Sunday Times report states, Caruso invited his detractors to continue their “campaign” against the Tormin mine, saying: “I am enlivened by [the] opportunity to grind all resistance to my presence and the presence of MSR into the animals [sic] of history as a failed campaign.”

Like Transworld Energy and Mineral Resources at Xolobeni, MSR has proved divisive in West Coast communities – such as Lutzville, Koekenaap and Papendorp – and it stands accused of numerous environmental and regulatory breaches since Tormin’s official opening in March 2014. The company last year admitted two transgressions of its mining licence and formally applied for post-event condonation, but it is objecting to the R1.25m fine imposed by the Department of Mineral Resources for these and the matter is still outstanding. Otherwise, it has denied causing environmental damage or acting illegally in any way in its mining operations.

In the past three years, MRC and MSR have between them instituted seven defamation suits against South Africans: prominent social worker, author and researcher John GI Clarke, who has been deeply involved in Pondoland for many years; three prominent environmental attorneys – Cormac Cullinan, Tracey Davies and Christine Reddell; community activists Mzamo Dlamini of the Amadiba Crisis Committee at Xolobeni and Davine Cloete of Lutzville near Tormin; and West Coast journalist Tossie Beukes. The first Tormin mine manager, since departed, also laid a criminal charge of defamation against Beukes.

These have been criticised as part of a deliberate SLAPP (“strategic lawsuits against public participation”) strategy, designed to bully, stifle and harass critics of the companies’ operations in South Africa, and none has yet been presented and argued in court.

At the time the defamation suit against them was instituted, Davies and Reddell were working at the Centre for Environmental Rights (CER). The CER says SLAPP suits are intended “to censor, intimidate and silence critics by burdening them with the cost of a legal defence until they abandon their criticism or opposition” and are aimed at “sending a message to all activists that resisting that company, and others like it, poses personal risk”. It also points out that SLAPP suits have been made illegal in many jurisdictions around the world on the grounds that they impede freedom of speech.

From his side, Caruso has accused critics of making “defamatory and unsubstantiated remarks aimed directly at diminishing the company’s core values of ensuring responsible environmental impact and high social and economic value for local communities”.

He was quoted as saying the company recognised the right of others to freedom of speech but that some individuals and organisations had “overstepped the boundaries of responsibility, truth and fairness”. The company enjoyed a right to defend itself.

Sierra Leone diamond venture

Caruso has been a director of MRC since 2000 and by 2006 he was managing director of the company.

Among promising mining ventures that he was promoting to investors in 2006 was a diamond tailings re-treatment operation in the diamond-rich Kono district of Sierra Leone, where some of the world’s biggest stones have been found. These include the “Star of Sierra Leone”, the third largest gem-quality rough diamond at just under 970 carats that was discovered in the alluvial deposits of the Koidu area in Kono province in 1972 – appropriately, on Valentine’s Day – and the world’s sixth largest rough diamond, the Woyie River Diamond weighing 770 carats, also uncovered in this area in 1945.

MRC purchased Erebus PLC, a UK-based company engaged in the exploration and development of diamonds in the West African country which owned the No. 11 Oversize Tailings Dump at Koidu, the country’s fifth biggest city and capital of Kono. It created a wholly-owned subsidiary, Kariba Kono SL (Ltd), and set to work.

In its Quarterly Activities Report for the period ended 31 December 2006, signed by Caruso, MRC said an 80-ton per hour diamond pan plant was due to be commissioned at the dump.

The plant was designed to increase diamond output tenfold and the tantalising possibility that earlier “flawed” processing technology meant some big stones might have been overlooked in the tailings by previous owners was underlined. Also, future opportunity beckoned – good relations with the chiefdom in the area might lead to other ventures, it noted.

But this dream of striking it rich in the diamond fields of Sierra Leone didn’t materialise; on the contrary, it turned into something of a nightmare for MRC.

Not only did the company not find any new large diamonds, there were also major problems with the diamond pan plant supplied by a South African engineering company. The plant arrived late and was able to process less than half of the 80-ton per hour specification. MRC later sued the supplier and, after a lengthy legal process, accepted an AU $2 million settlement.

Small numbers of diamonds were found by Kariba Kono SL. MRC’s quarterly report for April-June 2007 reports that 320 tons from the tailings dump and virgin ground were treated, from which 115 diamonds weighing 16.88 carats were recovered. The largest stone weighed 0.96 carats. At that point none of the small diamonds recovered from the dump had been sold.

“No diamond sales have occurred. However, a parcel of 516.64 carats of diamond rough was sent to London for valuation and a gross valuation of US$45,209 was achieved.”

No “specials” had been recovered from the operations.

By mid-2008, the board’s patience with their West African investment had run out and they decided to sell. The company quickly reached an agreement with online diamond jewellery retailer ROK Diamonds to sell the rights to the dump for $2 million. The plant was excluded from the sale and was later shipped to South Africa where it was put on the market.

However, the sale to ROK was delayed and then terminated, before apparently eventually going through; there is no mention of Sierra Leone in MRC’s 2009 annual report.

The company’s venture in the West African state coincided with the December 2006 release of the film Blood Diamond starring Leonardo DiCaprio. The film, with its plot centred on the smuggling of diamonds in a war-ravaged country, hugely raised awareness of so-called “blood diamonds” – rough stones, sometimes mined under conditions of near slavery, that are sold by rebel groups or their allies to fund conflict against legitimate governments and laundered through the legitimate diamond trade.

While there is no suggestion that MRC participated in any illegal practice or trade involving blood diamonds in Sierra Leone, the film generated huge publicity about the issue and, as John GI Clarke has pointed out, almost certainly scared potential investors in the diamond industry. It was not a great time to be trading diamonds from the area.

Ironically, as also pointed out by Clarke, the film was shot on location in the Mzamba River gorge area of Pondoland – the northern boundary of the Xolobeni mining right, where MRC was trying to mine – and hundreds of extras for the film were drawn from the Amadiba community where MRC’s proposed project subsequently caused major tensions.

Operation in New Guinea

Before his executive role at MRC, Caruso was chairman and chief executive of Allied Gold Mining PLC, which fully owned the Simberi Gold Project in the New Ireland province of Papua New Guinea. He was also responsible for the delivery of this company’s Gold Ridge gold mining project in the Solomon Islands.

Commercial production started in 2008 at the open-pit Simberi mine, located close to one of the top ten biggest gold mines in the world.

In January 2010, the Australian Broadcasting Corporation reported that some Papua New Guinea local media had labelled as “mercenaries” 14 Fijians whom Caruso had flown in to protect the company’s mining operation. He denied the accusation, and was quoted as saying the men were security consultants there to devise a training plan for the mine’s local staff – “We’re just looking to ensure the company has adequate security”.

In the first months of the Gold Ridge operation, Caruso was profiled in The Australian’s Business Review section which cast him as a confident rescuer of the local economy in a piece titled “Veteran goldminer offers hope to troubled isles”.

The mine had been operated between 1998 and 2000 but was abandoned because of civil unrest. In 2003 it was acquired from political risk insurers and in 2010 it was sold to Allied Gold that rebuilt the mine and re-started production in 2010.

The Australian’s report put Caruso at “a youthful 48” and noted his dislike of formality: “Caruso wears snakeskin boots, and looks less comfortable in a suit and tie than the Solomon Islands politicians he invited to the recent reconciliation event, which dominated local media for days.”

Caruso quotes a remark by American bank robber of a century ago, John Dillinger, to the writer of the piece – “We live our life like we’re going to die quickly” – before adding flamboyantly: “It’s an economic adventure. We will responsibly redevelop this mine, produce gold, and make a return to our shareholders. Is there pressure on me? Absolutely. But we’re making an outstanding start here.”

However, against the mining executive’s predictions in the 2010 piece, the Gold Ridge project appears not to have ended well.

In late August 2012 another Perth-based gold mining company, St Barbara Ltd, acquired the assets of Allied Gold.

In December 2014, The Weekend Australian carried a piece reporting that the then Allied Gold chief executive had been at the centre of an alleged corruption scandal in the Solomon Islands.

According to this report, Caruso had admitted arranging to pay for the children of an influential Solomons politician, Matthew Wale, to attend a top Brisbane boarding school. However, he denied that the gesture was in exchange for the politician greasing wheels in government to get a series of permits for a gold mine.

Caruso was quoted as saying he did not remember the actual payment, but that the schooling of Wale’s children had been done through a selection process as a benevolent gesture, for which Allied Gold had received no special favours.

Caruso used the opportunity to take a swipe at St Barbara, the company that had also taken over the Gold Ridge mine when acquiring Allied Gold’s assets and which he hinted was behind the scandal.

“Is this the best ­St Barbara can do after they ­destroyed $1.3 billion of shareholder value … be bothered about two children being educated?” he asked.

His comments came as St Barbara struggled to re-open the mine after massive rains had damaged access roads, and people had moved in to pan for gold, looting plant, equipment and supplies. “They are leaving the country on the grounds it was raining – are you serious? You wouldn’t let them manage the Mr Whippy van in the beach car park. The electricity would go off and the ice cream would melt,” Caruso was reported as saying.

Meeting Caruso

Because I’ve been writing regularly about Tormin for the past two years, I’d come across Caruso’s name numerous times, although I’d never engaged with him personally in any way.

An opportunity to meet him arose unexpectedly on 8 February when I was part of a small media contingent that accompanied Mineral Resources Minister Gwede Mantashe and senior officials from his Department of Mineral Resources officials on an inspection of Tormin, followed by a meeting with West Coast communities close to the mine.

At the end of their short in loco inspection tour, during which the mining executive assured Mantashe that his company was not responsible for major environmental damage – despite multiple claims and findings to the contrary – Caruso appeared to notice my presence for the first time. He had a quick conversation with one of his Australian employees with whom I’d just been chatting, and came striding over.

Obeying the mine’s strict PPE (personal protective equipment) code, he was wearing steel-capped safety shoes instead of his trademark snakeskin boots, but from the expression on his face I quickly realised this wasn’t going to be an occasion to chat about design and style in men’s footwear.

Instead, our conversation went something like this (I wasn’t using a recording device at that point):

Caruso: What’s your name? (he demanded as he reached me)

Me: John

Caruso: John who?

Me: John Yeld (holding out my hand to introduce myself).

Caruso: Ah, the famous John Yeld! (sarcastically, and grabbing my hand firmly).

Me: No, not famous, just John Yeld.

Caruso: The infamous John Yeld then! Why don’t you tell the truth? (keeping my hand locked in his).

Me: No, not infamous either. I’m just a journalist who tries to tell the truth. I think I do tell the truth.

Caruso: I don’t think so. I hope you’re going to tell the truth this time!

After a little more accusation-and-denial, he finally let my hand go, turned on the heel of his steel-capped safety shoe (he donned the snakeskin boots for the later community meeting) and marched back to where his officials and the VIP visitors were standing.

It’s a pity our chat ended so abruptly. Among other things, I’d wanted to ask Caruso why, if he really believed that his companies’ operating record in South Africa was beyond reproach and that the media was not giving them fair coverage, they did not respond to media queries? I’ve sent at least a half-dozen requests for comment and/or information during the past two years. Only some of those requests were acknowledged and answered, and in each case the response that did arrive was the bare minimum “No comment”.

My most recent request, just a few days before our encounter at Tormin, was to ask whether MSR had paid the R1.25-million fine imposed on it by DMR for two admitted transgressions: clearing a 3.9 hectare area for stockpiling material, and constructing a 2.2 hectare dam in a cleared area of 4.1 hectares – both without the required environmental permission and in contravention of the conditions of the company’s mining licence.

I’m still waiting for the company’s response, although I have found the answer elsewhere.

Prospecting for truth

I have a personal suggestion to make that I believe could go a long way towards reducing the undeniable tensions that exist between Caruso’s companies on the one hand, and the many South Africans affected by their mining projects, such as local communities and the concerned activists and civil society players, who have a wider concern about the impact of the projects.

It involves a search for the truth.

Caruso appears to be a wealthy man, and the exploitation of Tormin’s mineral sands riches is adding substantially to that wealth.

In the 2017 financial year, MRC reported a net after-tax profit of US$9.9 million (about R140 million) and paid a final dividend of 1.2 Australian cents per share. The Australian executive held 79,164,228 ordinary shares in MRC through indirect holdings and 15,784 ordinary shares in a direct holding. His total MRC cash remuneration package in 2017 was AU$810,000 – about R8.15 million.

According to marketscreener.com (“The leading Financial Portal for all Investors”), Caruso’s public holdings include 18.9% of MRC’s shares valued at US$9.5 million and 14.4% of coal company Perpetual Resources Ltd worth some US$313,000.

So here’s my challenge to Mr Caruso: between you and your companies that are making a handsome profit from South Africa’s natural resources, commit to a substantial reward for information leading to the arrest and conviction of those responsible for the murder of “Bazooka” Rhadebe.

Make it a really substantial reward, like AU$1 million (close to R10 million).

That might just be enough to persuade a whistle-blower to come forward and reveal the truth about this terrible incident that has blighted the Amadiba community ­– and that continues to haunt MRC’s mining projects.

Views expressed are not necessarily GroundUp’s or The Citizen’s.

Republished from GroundUp