Royal Bafokeng Nation and Impala Platinum Joint Venture Agreement
|Sub Category:||Joint Venture Agreement (South Africa)|
|Location:||North West Province, Republic of South Africa|
|Royal Bafokeng Nation land is located in the North West Province, north west of Johannesburg. |
|Payments:||Long-term royalty prepayment - Impala Platinum (R10.6 billion)Black Economic Empowerment (BEE) compensation charge - Impala Platinum (R1.5 billion)|
|Subject Matter:||Collaboration / Partnership | Management / Administration | Mining and Minerals|
|Summary Information: |
|The Royal Bafokeng Nation and Impala Platinum Joint Venture Agreement was finalised in April 2007, and saw 13.4% of Impala Platinum (‘Implats’) transferred to the Royal Bafokeng Holding Pty Limited ('RBH'), acting on behalf of the Royal Bafokeng Nation (‘RBN’). This includes a 49% interest in Impala Refining Services Limited, an arm of Implats set up in 1998 (Implats media release, 2006).|
RBN are the owners of the land on which Implats operates a high yield platinum mine in the North West Province of South Africa.
This transaction is in lieu of all future royalty payments by Implats to RBN for the remaining 32 years of its mineral lease period, and makes RBN the biggest single shareholder of Implats. Implats estimates the cost of this long-term prepayment of royalties at R10.6 billion. The deal also involves a commitment to contributing up to R170 million to the Impala Bafokeng Trust for community development up to 30 June 2017. The agreement includes a 'lock-in' clause stating that RBH cannot dispose of any of their shares unless their is a change of control of Implats. RBH has the right to nominate three out of ten Impala board members (including the deputy chairperson), at least one of whom must be a black woman (Mining Weekly, 6 October 2007).
This Joint Venture Agreement is considered to be a significant ‘Black Economic Employment’ (see below) transaction, and includes a BEE compensation payment of R1.5 billion, thus bringing the total value of the deal to R12.1 billion.
|Detailed Information: |
|The Royal Bafokeng Nation were land-owners throughout the nineteenth and early twentieth centuries; their land was registered in the names of missionaries of the Hermannsburg Missionary Society and then with offices including the Superintendent of Native Affairs because of the prohibition on Africans owning land in the Transvaal. |
The discovery of platinum ore on RBN land in the 1920s resulted in the first of several legal actions by the Bafokeng to protect their interests. They earned modest royalties on platinum up until the 1968 takeover of the mine by what was then the Impala Prospecting Company, a takeover that resulted in a huge increase in production and profits. Under the terms of their agreement with Impala, the Bafokeng were to have 13% of taxable income of the operations paid to them as royalties, a formula that did not prove advantageous to them. In addition, the RBN did not receive any payments until 1978.
The Bafokeng granted rights over a further area of their land to a different platinum mining company in 1986, and sought prospecting and mineral information over this area from Impala, a move that was successfully resisted by the company, with the support of the apartheid-era ‘homeland’ government of Bophuthatswana. Negotiations and legal action continued throughout the 1990s, with Impala instituting legal action to dispute, among other things, the title of the Bafokeng to the mine area (Manson & Mbenga, 2003).
This Joint Venture Agreement represents the settlement of that dispute.