Incwala ‘collapse’ row

2009-10-24 14:15

THE National Union of Mineworkers (NUM) on Friday said it was ­angry at what it called the “collapse” of Incwala Resources.

Incwala, Lonmin’s black economic empowerment (BEE) partner, was set up five years ago.

“The Incwala vision of becoming a diversified flagship for BEE in the South African mining sector, enabling widespread participation by historically disadvantaged South Africans, has formally collapsed and those who are at the forefront must acknowledge that they have failed workers and accept defeat,” NUM said in a statement.

It slammed Incwala’s combination of BEE and an Employee Share Ownership Scheme (ESOPS).

“The NUM has always been opposed, from the beginning, to the combination formula of BEE and ESOPS,” spokesman Frans Baleni said.

“It has now become tradition for business to undermine the interests of workers as we initially saw at Pamodzi Gold.”

Asked to comment, Lonmin’s London office referred to its website, insisting that the situation had not changed since it issued a statement on September 30.

The statement said Lonmin might be called upon to pay out a sum of R930 million in loan guarantees for shareholders of Incwala. Discussions were being held with the black shareholders of the firm.

If the discussions about the future ownership of Incwala were not successful, Lonmin could be called upon to provide funds under guarantees given in 2004, the statement said.

“In these circumstances, these guarantees could be funded from Lonmin’s existing bank facilities,” it said.

Much of the bank-funded debt and vendor finance taken on by black shareholders of Incwala was due to mature soon and if refinancing was not possible, Lonmin could be called upon for funds.

At the end of March, contingent liabilities were R930 million, R177 million of which would not become payable until September 2011.

“It is also possible that alternative solutions involving the participation of Lonmin could be found, some of which could involve an economic cost to Lonmin in excess of the current recognised contingent liabilities,” the statement read.

The company said such solutions would only be considered if the board believed they would promote the success of Lonmin for the benefit of its shareholders.

Incwala owns 18% of Lonmin units Eastern and Western Platinum and 26% of Lonmin’s Akanani project. On a more positive note, NUM congratulated Lonmin on its decision to relocate its operational headquarters from London to Johannesburg. – Sapa

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