The news that Australian-based heavy mineral sands mining company Mineral Sands Resources (MSR) has been placed under provisional liquidation after more than a decade of controversy is a sad reminder of how the mining sector in South Africa has failed in its oversight role to protect the environment and ensure fair distribution of benefits for local people.
The Western Cape division of the High Court placed MSR under provisional liquidation in 2024 after attempts to save its Tormin mine failed. The application was brought, unopposed, by a secured creditor who was not identified in a statement by MSR.
Protect the West Coast (PTWC) notes with grave concern – among a litany of other problems and negative milestones listed below – that a large stretch of the West Coast faces permanent ruin because measures to mitigate impacts and rehabilitation have not been judiciously implemented, resulting in the future of the area becoming entangled in yet another bureaucratic dead-end.
The liquidation follows an announcement by MSR in August 2024 that it had been placed under business rescue after cash flow shortages at its Tormin mine, near Lutzville, and was in debt to its creditors. In November, the mine “temporarily suspended” operations.
The provisional (and inevitable) final liquidation process for MSR comes at the end of a fitful decade of controversy almost from the day they started mining for heavy mineral sands such as garnet, ilmenite, rutile, and zircon-rutile at Tormin in 2014. MSR faced objections, appeals and litigation from civil society on environmental issues, concern around cliff slumps and collapses onto the beach and mining in a Critical Biodiversity Area, as well as failure to adhere to the requirements of the Environmental Management Programme report (EMPr).
The mine has been subject to two lawsuits: one launched by a provincial government agency and another by the Centre for Environmental Rights in 2020 challenging the decision to allow an extension of the mining right under Section 102 of the Mineral and Petroleum Resources Development Act (MPRDA). Pushback from communities over MSR’s labour practices, and alleged failure to comply with their own Social Labour Plans (SLPs) are among other allegations.
The company has two owners – Mineral Resources Commodities Limited (MRC), an Australian company based in Perth, and a consortium of South African Broad-Based Black Economic Empowerment (B-BBEE) partners.
The Business Rescue Practitioner (BRP) assigned in December 2024 to administer the business rescue, Engaged Business Turnaround (EngagedBT), failed in a plan that it said was to “guide the next steps for a sale of Tormin or further restructuring of the operation to ensure sustainability”.
As head of PTWC Legal, Patrick Forbes said, “Business rescue is unfortunately, more often than not, a precursor to liquidation and this situation is no different. This entire scenario calls into question all the estimates and forecasts regarding the life of mine and the grade and extent of the heavy mineral sands ore body that MSR projected it would be able to mine, including the calculated replenishments that appear to have been overestimated.
“If there were viable options to continue mining, one would have assumed that a new investor, or buyer, could have been found for the business during the business rescue process. This has clearly not happened, and it doesn’t bode well,” he said.
The provisional liquidation comes after three business rescue meetings to vote on a BRP plan to realise the value of the asset were postponed or cancelled in three months. The first meeting on 13 December 2024 was postponed and so was the last on 31 January. By March 2025, no meetings had been held. Options had run out, and the liquidation kicked in.
Tormin Liquidation Closes Loop for PTWC
The High Court order closes a deeply significant loop for PTWC, which was formed partly because of the controversy surrounding the Tormin mine and in particular, the government approval for MSR to expand its mine northwards along a huge stretch of coastline in what was called the 10-beach extension, as well as an inland “strand line” mining area, part of which was located in a critical biodiversity area.
In late 2019, a friend tagged avid conservationist and surfer Schlebach in a social media post linked to a Daily Maverick article about how MSR had been granted a right to expand their 120-hectare (ha) heavy mineral sand operation at Tormin to include 10 beaches to the north and the inland area. This would extend their mining area by 125ha, plus an extra 64ha for machinery and infrastructure.
The extension was challenged by the Centre for Environmental Rights (CER) on the basis
that it was not the intention of Section 102 of the MPRDA to enable mining companies to
significantly extend mining areas without applying for a new mining right and environmental authorisation. Further arguments centred on a lack of consideration of “cumulative impacts of mining activities” as well as the loss of a Critical Biodiversity Area and a recognised ecological corridor of importance.
However, as reported by journalist John Yeld, the appeal was dismissed by then Environment Minister Barbara Creecy on 26 March 2020 just as growing chaos and lockdowns wrought by COVID were being felt across the world. Covering the challenge for Groundup, Yeld pointed to a crucial part of the CER appeal: the legality of Section 102 of MPRDA, which allows the state to “simply expand existing exploration and/or mining rights without any further environmental, social and economic assessments being required”.
Schlebach was curious to investigate the area, but lockdowns were in place. It seemed that the mining was being helped by the lockdown on an already “out of sight, out of mind” coastline. In September 2020, as lockdowns were eased, Schlebach travelled up the coast to explore.
When he tried to access the coast at De Punt – supposedly accessible to the public – he was stopped by security guards. The uncomfortable reality of this event, and his discovery of a deluge of mining applications along the coast led Schlebach and others to formally constitute PTWC.
Xolobeni Controversies
Controversy has stalked MSR since 2009, when it was awarded a mining right at Xolobeni on the Wild Coast, which precipitated years of clashes with communities led by the Amadiba Crisis Committee, as well as legal challenges.
Environmental consultant and author Glenn Ashton wrote in Groundup in 2016 that ongoing disputes between unionised labourers and MSR had resulted in “violence, extended court cases and unilateral pay cuts”, which created “bitter tensions between the mine and local residents”. A local activist opposed to the mine, Sikhosiphi ‘Bazooka’ Rhadebe, was murdered at the time. There have been no arrests.
The tensions prompted MSR CEO Mark Caruso, who later stepped down from the board of parent company MRC after facing charges of assault back in Australia, to quote a bible verse: “I will strike down upon thee with great vengeance”.
Caruso launched a defamation suit against deputy chairperson of the Amadiba Crisis Committee, Mzamo Dlamini, and environmental attorney Cormac Cullinan, other lawyers and activists, taking umbrage at statements criticizing MSR in books, interviews and talks. The case, described by Groundup as a SLAPP suit, was eventually settled out of court, and was seen as a victory for the environmental movement in South Africa.
Allegations of illegal activity at Tormin
MSR eventually withdrew from Xolobeni, and turned to Tormin to leverage the mining permit it had gained in 2012, and started mining in 2014. But, as Ashton documented in 2015 on the website of the South African Civil Society Information Service (SACSIS), MSR almost immediately attracted “allegations that its methods of operation are illegal and irregular” including “a lack of suitably careful mine management” that saw “cliffs adjacent to the treatment plant collapse onto the beach”.
The sorry saga of MSR, and their apparent ducking and diving to evade oversight, is no better illustrated than these deviations from their original Environmental Assessment: they could take only zircon/ rutile to a volume of 5% of beach sand; no mining or vehicles were to come within 10 meters of the base of the cliff; they were to work sequentially along the beach; overburden (the excavated sand) needed to be placed in the void left where it was taken from; waste water needed to be properly managed; and any changes to the above rules would require prior approval.
However, as Ashton observed in a lecture at the UCT Summer School in January 2017, MSR broke all of the above. Fifty percent of the beach was dug up and they went for garnet, ilmenite, zircon and rutile; they worked within the 10 meter exclusion zone from the start; they did not work sequentially; the overburden was placed mainly below a processing plant on top of the cliffs; and wastewater was badly managed. The latter two transgressions allegedly led to various cliff collapses over this period.
To top that off, MSR only applied for various deviations from their original authorisation, once their transgressions were found out, as part of the MPRDA, Section 102 and National Environmental Management Act (NEMA) Section 24.
Allen Lyons, a retired geologist who lives in Strandfontein to the south of Tormin, has studied the links between the Tormin operation and the cliff collapses. Lyons was interviewed by Groundup in 2018, recounting how he compiled mining data from satellite images to understand the collapses of the cliff that stands between 30 and 50 metres above the sea. An original cliff failure in 2015 was followed by another four collapses as big or bigger than the original, and all “occurring in areas where the beach has been mined more than once and where mining benches have advanced to within ten metres of the toe of the cliff”.
In an article on Daily Maverick investigative unit Amabhungane, MSR was reported as causing the collapse of the cliff below its processing plant “through inefficient control of the plant and operating too close to the cliff in breach of approval conditions”. The article quoted Dinah Louw, an environmentalist for the CER, as saying: “The plant stands within 100 metres of the cliff. Excess water is not controlled and there is constant run-off into the environment, killing vegetation and causing erosion and seepage”.
Amabhungane wrote that “among other breaches”, MSR was accused of breaching the terms of the original environmental plan by “expanding the mine without authorisation under NEMA; mining garnet in violation of the environmental management plan; mining in conservation areas; using unauthorised roads to transport products; and pumping raw sewage into the sea”.
MSR’s consulting company SRK – in a report on Groundup and Daily Maverick – said: “there is no specialist or technical basis to support the contention that the non-return of mining sand to the beach has contributed to the cliff failures”.
Questions about mining methods and production volumes at MSR’s Tormin operation ultimately led to an agreement with the CER in 2022 when MSR pledged to take measures to improve its environmental impact after the CER’s legal action in 2020.
Tormin Challenges
In the leadup to the business rescue and subsequent declaration of provisional liquidation, other factors added to Tormin’s financial woes. These included the oil spill from the MV Ultra Galaxy cargo ship in July 2024, and the news that its Australian parent MRC had voluntarily suspended trading on the Australian Stock Exchange ASX due to financial problems.
MSR director Russell Tipper, a non-executive director of MRC, cited other factors, such as damage to the mine’s water supply by severe ocean storms in 2024, blockages and delays in a secondary processing plant, multiple failures in the excavator fleet that reduced it to zero, and a reduction in the mine’s trucking fleet from six to two vehicles.
Delayed salaries to approximately 300 workers was also reported. They were eventually paid, but all work ceased after the mine shut. A PTWC source in the region said some had found other work, but many had not, even though EngagedBT told PTWC in late December that “there have been no job losses at the mine”.
An Uncertain Future
PTWC has raised the alarm over two key concerns. The first is whether Tormin has fulfilled its Social Labour Programme (SLP), which includes plans to uplift local communities as a condition of its mining permit. The second concerns rehabilitation. In light of the chequered history of this mine and its owners, will rehabilitation obligations be fulfilled as per the Mining Works Programme (MWP)?
According to the head of legal at PTWC, Patrick Forbes, “the question now is whether the financial guarantees for required rehabilitation are going to be called upon to give effect to the remediation work required, and whether those guarantees in terms of the quantum will be sufficient. Or, will this mining right be transferred to a third party to pick up the tab and the can kicked further down the road?”
Either way, it is incumbent on the DMRP to ensure that rehabilitation and proper mine closure take place should a mining company be shut permanently.
On the West Coast, bankruptcy is often a way to sidestep this crucial and legally binding component of mining, especially in the Northern Cape, where unrehabilitated sites are a blight on vast areas of the coastal landscape.
“The mine’s closure and rehabilitation fund’s liability is assessed annually, and the shortfall on this liability is submitted to the DMRE as required by law,” wrote EngagedBT in reply to PTWC. “If the mine is sold, the new owner would be required to… meet all environmental responsibilities.”
In response, PTWC MD Mike Schlebach said: “Apart from the claim that MSR are a major contributor to the West Coast economy – for which we have seen no direct proof – a permanent loss of income for local employees is a massive concern, as is the rehabilitation requirement, “including the concerning cliff collapses within their mining zone”.
Schlebach said that the situation underlined the crucial need for a Strategic Environmental Assessment (SEA) and a moratorium on new mining applications for the entire West Coast until the cumulative impacts of the mining industry could be assessed.
“We can simply no longer tolerate a situation where mining companies are allowed to operate as they please and then simply go into liquidation to the detriment of the communities and environment,” he added.
Donate now
PTWC needs your help to boost our legal work as part of our Legal Accountability Programme, which will enable us to enforce compliance of the law to protect communities and the environment on the West Coast.
