Rio Tinto and BHP Billiton have finalised their long-awaited R4,5billion empowerment deal - the largest BEE transaction KwaZulu-Natal has seen.
The deal will see local communities taking up shareholding in a new empowerment company, Richards Bay Minerals, and earning R3million a year in dividends and corporate social investment spend.
RBM said this week that the 26 percent stake sold to communities in Richards Bay took years to finalise.
The communities, including the Sokhulu, Dube, Mbonambi and Mkhwanazi clans, will not be required to pay upfront. RBM said funding arrangements were still being finalised.
A public benefit trust will be set up by each community to facilitate development projects in each area.
RBM has undertaken to make once-off payments of R17,5 million to each trust on completion of the transaction. Its 1750 permanent employees will be allocated 2 percent of the 26 percent stake while 24 percent will be held by lead investors together with the four communities.
Lead investors include Imbewu Consortium, Matasis Investment Holdings, Gade Investments, Sambulo Investments, South African Woman Alliance, Ungoye Investments and Bingelela Investments Consortium.
The interests of the communities and lead investors will be held through a special-purpose company, BEE Holdco, created specifically to hold their interest in RBM.
The lead investors will hold a 55 percent interest in BEE Holdco with 45 percent going to the communities.
Cameron McRae, RBM's managing director, said the company was already supporting empowerment companies.
"Last year RBM spent R3,1 billion with suppliers, many of whom were small black-owned enterprises. This year R1,2 billion was spent procuring from BEE ventures and R81million with businesses from the four communities," he said.