$2 billion South African mine at risk

A plan by Jindal Steel & Power to develop an up to $2 billion iron-ore mine in South Africa is facing opposition from communities who say the operation would require thousands of homes and graves to be relocated.

The proposed mine in Melmoth, in the eastern KwaZulu-Natal province, would dwarf recent investments in South Africa’s mining industry.

It could produce 32 million tons of magnetite ore a year by 2031 after starting production in 2027, the company said in an emailed response to questions. Jindal is controlled by Asia’s richest woman, Savitri Jindal, and her family.

“Our community of Makhasaneni has been fighting Indian giant mining company, Jindal Mine, who for years have been intruding with their plans to dig up iron ore in the lush hills that we have called home for generations,” community members said in a petition signed by more than 6,700 people. Jindal says a minority of residents oppose the project.

The obstacles faced by the company highlight the challenges of investing in South African mining, where decades of violations of environmental and social rights under apartheid eroded trust.

At the same time, chronic unemployment and poverty in one of the world’s most unequal nations often pit people against each other when projects offer the prospects of work and business opportunities for some. 

The Entembeni Crisis Forum, the group that organized the petition, said an assessment of the area that Jindal wants to mine shows it could lead to more than 3,000 households and 3,000 graves being moved.

According to the firm, about 350 homes would be impacted, subject to a final determination, for the first stage of mining. That could take about 15 years, while the number of graves that would need to be relocated is yet to be assessed.

“All resettlement decisions will be made in consultation with affected households,” Jindal said. “If graves are to be exhumed, the exhumation of graves will follow the legal requirements.”

The forum said it’s also concerned about the potential for environmental harm and the loss of agricultural land. 

The mine lies about 70 kilometres from the port of Richards Bay, and the ore, which has a grade of about 26%, could be exported for use by Jindal’s steel mills in Oman or India or sold, the company said.

It expects to get a mining license next year, and a processing plant will take two-and-a-half years to construct. It will be the second-biggest operation of its kind in South Africa after Kumba Iron Ore’s Sishen.

Jindal also mines anthracite in South Africa and metallurgical coal in Mozambique.

It signed a contract on July 25 to dig a coal mine and build power plants to supply Botswana with 600 megawatts of electricity. That project will start with the construction of a 300 MW plant, according to the government.