Lonmin’s Bapo deal under fire
Empowerment pact with North West tribe described as problematic
A NON-GOVERNMENTAL organisation has accused Lonmin of being a political problem for the Bapo Ba Mogale Traditional Authority .
In a report titled “Dealing with the Tribe: The politics of the Bapo/Lonmin Royalty to Equity Conversion”, the Society, Work and Development Institute (Swop) described the empowerment deal between the 40 000-strong Bapo tribe in North West and Lonmin as problematic.
Authors Gavin Capps and Stanley Malindi said there was pressure on the company to meet the remainder of its 26% empowerment target by diversifying the social profile of its black shareholders, with the release of the amended Mining Charter.
“These pressures would only intensify with the public relations disaster and subsequent exit of its BEE-figurehead that, for Lonmin, was Marikana,” it said.
The report comes as the industry eagerly awaits Mineral Resources Minister Mosebenzi Zwane to publish the charter.
The cabinet on Wednesday approved the draft mining charter, which will be released for public comment once it has been gazetted.
In 2014, Lonmin announced a major empowerment deal with the Bapo to ensure that a royalty previously paid was converted into a direct stake in the company worth R564 million, later valued at 2 percent of the company.
The report said that the company said the community would also receive a “deferred royalty payment” of R100m to support its administration costs and opportunities to bid for mine supply contracts valued at R200m.
However, the report added that the reported tally at the meeting, where the community agreed to the deal, was 779 in favour and 51 against.
Lonmin was awarded its first mineral lease on Bapo land in 1969. The relations have been difficult against the backdrop of a deeply divided chieftaincy .
“For long periods, the tribe has been without a functioning and legally recognised administrative authority, in large part due to the internecine conflicts within its ruling elite,” said the report. “This, some have argued, has at times actually worked in the interest of both the mining company and elements within the North West provincial government, which was entrusted with the fiduciary control of its finances through the D-account system.”
The system was an account into which mining royalties were to be deposited, but which was mismanaged.
The report said that the mining royalties rolled in, and a total of more than R617m – comprising R392m in deposits and R224m in interest earned – would accrue to the tribe over the next two decades. Yet, by 2014, only R495 000 of this remained. Lonmin was the scene of the Marikana massacre in 2012 in which 34 mineworkers were killed during a strike for higher wages.
The report, which was launched in Johannesburg on Friday, also reflected on how Deputy President Cyril Ramaphosa’s Shanduka Group became Lonmin’s empowerment partner in 2010 and upon his role in the August 2012 Marikana Massacre.
The company has also been under fire for reneging on a pledge to build 5 500 houses for mineworkers and local villagers around its mining complex.
This month, Lonmin was rocked by community protests for jobs as promises of upliftment have not been met. These coincided with a drop in the price of platinum.