Johannesburg - Empowerment deals signed at Richards Bay Minerals (RBM) yesterday valued the heavy minerals producer at about R17.3 billion.
RBM, a 50-50 joint venture between Rio Tinto and BHP Billiton, said yesterday seven black economic empowerment (BEE) groups, communities and employees had bought a 26 percent stake in RBM for R4.5 billion.
The BEE investors are: Imbewu Consortium, 3 percent; Matasis Investment Holdings, 3 percent; Gade Investments, 2.02 percent; Sambulo Investments, 2.02 percent; South African Woman Alliance, 1.44 percent; Ungoye Investments, 0.86 percent; and Bingelelea Investments Consortium, 0.86 percent.
Following the conclusion of the empowerment deal, RBM will apply to the department of minerals and energy for the conversion of its mining rights. All conversions need to be applied for by April.
The heavy minerals that RBM produces are used mainly in the production of paint pigments.
The group produces titanium dioxide, rutile, ilmenite and zircon at its mining and processing operations. RBM supplies 25 percent of the world's pigment, a quarter of the iron in iron castings and a quarter of the zircon.
Rio Tinto announced that it had agreed with BHP Billiton to restructure the joint venture.
Rio Tinto agreed that BHP Billiton could sell its stake in the restructured RBM, calculated at fair market value at the time of a possible sale. RBM said the firm was now valued at R18 billion, compared with R19 billion in September, when it was valued by Rand Merchant Bank.
BHP Billiton's right to sell its stake in RBM will expire in certain circumstances, including if Rio Tinto stops marketing RBM's products or if BHP Billiton sells its interest in the joint venture to a third party.
After the completion of the empowerment deal, Rio Tinto and BHP Billiton will each own 37 percent of RBM.
The Sokhulu, Dube, Mbonambi and Mkhwanazi communities, which will own 10.8 percent of RBM, will not be required to contribute upfront equity for their stake. A trust will be established for each community, through which communities will hold shares in RBM.
"The Sokhulu and Dube communities have signed the agreements. Discussions with the Mbonambi and Mkhwanazi communities are ongoing with a view of incorporating them," RBM said.
All of RBM's 1 750 employees will participate in the employee share participation scheme, which will hold a direct 2 percent equity interest in the company.