Why won’t Lonmin learn?

2014-11-16 15:00

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What has the mining firm learnt in the two years that have elapsed since the Marikana tragedy? Very little, if its new leadership is anything to go by, writes Ferial Haffajee

Take a look at the pictures below. This is Lonmin’s leadership. Does this look like a board that can efficiently run a tough platinum enterprise in a volatile belt of South Africa?

Marikana directors

With one black African South African on board (Shanduka CEO Phuti Mahanyele), the operation is largely led by expatriate South African-British hybrid executives.

Its CEO, Ben Magara, is Zimbabwean.

Nobody on the board has a historic or well-known labour specialisation even though relationships with employees are fractious. There are two women and no worker representatives.

Viewed through the prism of progressive practice in board representation, the board falls short on many grounds. The best companies have boards that represent a diverse range of race, gender, class and generational attitudes and interests.

Instead, this is Lonmin after Marikana, the word that has come to symbolise one of post-apartheid South Africa’s darkest moments.

A total of 44 people were killed there over a fortnight in August 2012. Most were miners shot by police; two were security guards; two were police officers allegedly killed by miners in a wage strike that turned unbearably violent.

What has Lonmin learnt in the two years since Marikana? Very little, if its new leadership is a marker.

It still looks and feels like a colonial enterprise; and in the course of the Marikana Commission of Inquiry into the deaths of miners and security guards at the Lonmin mine, its arguments suggest that I am not far off the mark.

The company’s modus operandi is to extract and repatriate with little evidence of reinvestment in its operation or its people.

It failed miserably to meet the social and labour standards it set itself when it won the licence to mine some of the richest platinum deposits in the world.

In addition, Marikana and the commission which has followed, show that black empowerment can often be an elite wealth-transfer scheme, not a transformative business model.

Mining does offer models like that at Kumba where workers are owners through employee share ownership schemes. It is not unusual to have worker representatives on a board.

The options for Lonmin to overhaul its operations were far greater than those it has come up with. The company appears to have downgraded labour relations – a top skill in countries with high rates of unionisation like ours.

Incwala, the structure through which Deputy President Cyril Ramaphosa’s Shanduka Group acquired a stake, was a largely passive investor. He and his team did not alter power nor working relationships at Lonmin.

In fact, through the commission, we see it was business as usual after the deal was done to empower the miner.

This was despite Shanduka earning a substantial empowerment consultancy fee from Lonmin.

Cyril Ramaphosa

If we had a more robust black business movement, it would have asked tough questions of Ramaphosa, Mohamed Seedat and Len Konar, the three black South Africans who were on Lonmin’s board when Marikana happened.

Black empowerment policies are premised on notbeing a business-as-usual model, but nothing substantial has changed after Ramaphosa and his company came on board.

Was it not possible for Ramaphosa – with his hard hat-and-boots experience as a mine worker’s leader (He was the first general secretary of NUM, the National Union of Mineworkers) – to democratise labour relations and introduce new ownership patterns? After all, he understands mines and miners.

Ramaphosa’s life represents a symbol of a changed ownership pattern. From a union lawyer, he is now one of South Africa’s wealthiest people.

Instead, the strike at Marikana was preceded by multiple failings of intelligence and labour relations structures. It was badly run and ill-transformed.

Reading through the company’s arguments before the commission, a vast gulf between workers and leaders is detectable – a fact that an engaged board led by Ramaphosa should have picked up.

Marikana started with a dispute by rock drill operators who wanted a monthly wage of R12?500. This demand was taken up with gusto by a large number of workers, with evidence of intimidation of those who did not add their voices to the demand.

Rock drillers are the kings of the coalface. They toil in the harshest of conditions and without them, the resource-yielding mining seams would not be found. A special dispensation is not inconceivable, but the company was unable to negotiate effectively with them.

A manager who tried was stopped in his tracks as it was feared his efforts would diffuse NUM’s power.

The Lonmin submissions go on for pages about how workers could not rationally justify the R12?500 monthly wage demand – a point the company repeats to show that the miners sought an impasse.

This, I would argue, marked a failure by Lonmin to be responsive to the demands on salaried workers from rural areas where local economies have been gutted.

A well-managed company would have tagged the risk posed by the high levels of indebtedness of their workforce and been able to at least understand the genesis of the demand. I know it wasn’t affordable, but simply understanding it might have created a better atmosphere.

They would also have known that NUM was regarded as something of a sweetheart union and that the muscular Association of Mineworkers and Construction Union was fast making strides.

Seedat made excuse after excuse before the commission to explain away the company's failure to meet social and labour goals it agreed to in its mining licence.

The commission heard arguments that the feudal conditions in which the miners lived contributed to a context that made the area combustible.

“By the end of the 2009 financial year they [Lonmin] had built only three of the 3?200 houses it had undertaken to build,” said the commission’s evidence leader Geoff Budlender.

Seedat said the company’s commitment went only as far as brokering an agreement with banks or other financial institutions. Budlender and his team replied: “This attempt by Lonmin to wash its hands of an obligation that it repudiated must be rejected.”

The commission’s final report will determine what Lonmin’s role was in the manner in which the tragic events unfolded. What Marikana and the commission that was formed to probe it have revealed is that the company failed the test of good corporate citizenship.

Ramaphosa and Marikana

“It can be contended that Mr Ramaphosa, as a nonexecutive director, was insufficiently attentive to the underlying labour dispute?...?It may well be that the directors, and perhaps particularly Mr Ramaphosa given his background, should have appreciated the need for urgent action to address the underlying labour dispute and should have intervened actively to ensure management took action.

“However?...?it cannot be fairly suggested that the call for ‘concomitant action’ to be taken in respect of murders and violence involves the exercise of inappropriate political influence, or an attempt to have the police brought in to break the strike.

“...?he may well have had a legal obligation to take what steps he could to prevent the killing or injuring of Lonmin’s employees?... and the damaging of its business.”

– Final argument, evidence leaders, Marikana Commission of Inquiry

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