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Xstrata Alloys and Bakwena Ba Mogopa Community Joint Venture Agreement

Date: 8 January 2007
Sub Category:Joint Venture Agreement (South Africa)
State/Country:Republic of South Africa
  • Payment for Share in Joint Venture - Bakwena Ba Mogopa community (R575 million)
  • Subject Matter: | Management / Administration | Mining and Minerals
    Summary Information:
    The Xstrata Alloys and Bakwena Ba Mogopa Traditional Community Joint Venture Agreement was agreed between the two parties on 8 January 2007, and relates to Xstrata's Rhovan vanadium mine, located near Brits in the North West Province of South Africa.

    The agreement sees the Bakwena Ba Mogopa community ('the community'), owners of the surface rights of the Rhovan mine, exchange royalty payments for a 26% stake in the operation through a Pooling and Sharing Venture. The community is also contributing cash and receiving vendor finance from Xstrata Alloys to finance the deal. This stake will see the community receive 26% of earnings before interest, tax, depreciation, amortisation and cash flow are deducted. The agreement is worth R575 million, which includes a Black Economic Empowerment compensation charge.
    Detailed Information:
    This agreement follows the expiry of the previous lease over the mine at the end of 2006. The deal includes the following elements:
  • The community is guaranteed a minimum cash distribution equal to the amount of royalties it used to receive;
  • The control of the Rhovan operations will be overseen by an executive committee, comprised of community representatives and Xstrata; and
  • Xstrata will implement a skills transfer programme that will train community members in management of the mine.

    The agreement also means that Xstrata Alloys is now in compliance with the ownership provisions of the Mineral and Petroleum Resources Development Act 2002 which prescribes certain levels of 'historically disadvantaged South African' ownership in order to receive new mining licences. Chief MC Mathibedi of the Bakwena Ba Mogopa is quoted as saying '[t]he vanadium mine has historically played a significant role in our Community. We are pleased that the community is now a material shareholder in this business' (Xstrata media release).

  • Related Entries

  • Xstrata Alloys - Signatory
  • Legislation
  • Mineral and Petroleum Resources Development Act, 2002 (South Africa)
  • Mineral and Petroleum Resources Development Regulations, 2004 (South Africa)
  • People
  • Bakwena Ba Mogopa Community - Signatory
  • Policy/Strategy
  • Black Economic Empowerment

  • Glossary

    Joint Venture Agreement (South Africa)

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