Lonmin's future in balance as govt studies non-compliance allegations

Johannesburg - Lonmin's future is still in the balance as the Department of Mineral Resources (DMR) probes allegations that it violated its mining licence. 

The department confirmed it is studying the contents of letter by Mining Forum SA, which alleged Lonmin [JSE:LON] is in breach of its social and labour plans. It will only then decide on the “appropriate course of action”, the department told Fin24. 

Mining Minister Mosebenzi Zwane’s spokesperson Fidel Hadebe said claims of non-compliance still need to be verified and “there are just too many allegations levelled against the company”.

Mining Forum SA, a non-profit organisation representing mining communities, wrote to Zwane on November 25 asking him to “suspend Lonmin’s [mining licence] due to SLPs' [social and labour plans'] non-compliance and the containing violence in the [Marikana, North West] community”.

The department's inspectorate raided Lonmin mines in the North West region in August and found that Lonmin did not comply with the commitments made in its social and labour plan of 2014 to 2018, the lobby group alleges.

The Mineral Resources and Petroleum Development Act 2004 requires all mining companies to submit a social and labour plan, reviewed on annual basis, in order to be awarded and retain a mining licence. Commitments usually include upgrades to communal infrastructure, employee housing and skills development and promises of local procurement. 

Mining Forum SA, which also backs the controversial new Mining Charter, states on its website that “it aims to see compliance of the laws and regulations governing the mining industry for the benefit of mine employees and communities”.

The organisation’s president Blessings Ramoba said the failure by the world’s third largest platinum producer to implement its social and labour plans has led to strife, divisions and even violence between the Bapo Ba Mogale tribal authority and mineworkers employed by Lonmin. 

Lonmin's back against the wall

Lonmin was at the centre of the Marikana massacre that saw 34 mineworkers killed by the police during an unprotected wage strike near the company’s mining operations in Marikana in August 2012.

The platinum producer is currently battling financial problems as a result of the weak platinum price and rising costs. It’s yet to publish its 2016/2017 financial results and attributes the delay to an operational review, which is under way. 

Lonmin is also selling off assets and cutting 1 100 jobs in an effort to make the company profitable.

In a response to Mining Forum SA’s letter to Zwane, Lonmin’s spokesperson Wendy Tlou said in a statement in October that after the August raids, Lonmin was requested to submit an action plan to address the areas identified.

"That action plan has been submitted and received by the DMR, and Lonmin will now give the DMR regular progress updates on the implementation of the action plan”, Tlou stated.

Lonmin CEO Ben Magara met Ramoba and five officials who are part of Mining Forum SA to discuss the social and labour plans, Lonmin added.

“It became clear that Mr Ramoba’s ‘offer’ to Lonmin was to engage Mining Forum South Africa to consult to Lonmin at a fee of R33.1m."

Lonmin added that it has awarded “significant procurement contracts with a combined gross value of R1.65bn to the Bapo Ba Mogale”, and it will continue to engage with the tribal authority, the DMR and unions through recognised and official channels.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER
Brent Crude
All Share
Top 40
Financial 15
Industrial 25
Resource 10
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Yes. We need the money.
11% - 1352 votes
It depends on how the funds are used.
73% - 8801 votes
No. We should have gotten the loan elsewhere.
16% - 1941 votes