Lonmin and state unite in ire over case

Lonmin has branded as deeply flawed and misleading a court challenge to stop Sibanye-Stillwater’s R5bn takeover of Lonmin by challenging the platinum miner’s adherence to a social and labour plan.

The department of mineral resources, which stands accused by Mining Forum of SA and its president Blessings Ramoba of being ineffectual in its dealings with Lonmin’s social and labour plans, acted equally as angrily as the platinum miner, requesting the court in its affidavit to throw the matter out and order “punitive costs” against the forum and Ramoba.

The forum and Ramoba argue that Lonmin “never complied with its statutory obligations over the years of conducting its operations”.

“It has been able [to] successfully evade its obligations principally because of the lack of effective policing by the department of mineral resources,” they say. In their affidavit due to be heard in the high court in Mahikeng on October 26, the forum and Ramoba are asking the court to interdict Lonmin from selling any assets and to order mineral resources minister Gwede Mantashe to compel Lonmin to halt operations until it had complied with its obligations laid out in the social and labour plan.

Thandeka Ncube, Lonmin s executive vice-president of stakeholder engagement and regulatory affairs, said in reply such a demand would lead to hardship to Lonmin’s 30,000 employees if the forum and Ramoba had their way.

“The picture and events sought to be portrayed by the applicants in their founding affidavit have been wilfully misrepresented, and one is left bewildered by the astonishing approach which the applicants have adopted in pursuing this application. How this can be to the benefit of the mineworkers or the local community if it is not explained by the applicants,” Ncube said.

She accused Ramoba of misleading the court by leaving out critical bits of information, such as that the forum twice approached Lonmin with business proposals, which the company declined.

One of the proposals would cost Lonmin R33m, leading to employment of Ramoba and at least one other forum member in an “SLP [social and labour plan] intelligence unit” over five years, with salaries escalating 10% a year.

“Lonmin’s rejection of these proposals is, I submit, the true reason behind this application,” Ncube said.

“In short, Mr Ramoba’s reasons for bringing this application are not, as he pretends, altruistic. He is, on the contrary, motivated by self-interest,” she said.

Lonmin, headed by CEO Ben Magara, went on to detail how it spent more than R727m in the three years to 2016 on meeting its obligations under its social and labour plan.

In that period the company was coming under intense financial pressure, running deepening annual losses with high levels of cash outflows.

The company had to turn to shareholders at the end of 2015 to raise $369m in a deeply discounted and desperate rights issue. This was the third approach to shareholders since 2010 and brought the total call on the company’s investors to nearly $1.6bn.

Against this backdrop where mining costs were fast increasing against a weak price for the basket of metals Lonmin mined, the company fell behind in its obligations outlined in the social and labour plan against which its mining rights were awarded.

An assessment by the department and a short-lived cessation of mining order issued in November 2017, led to a revised plan proposed by Lonmin and accepted by the department in early 2018 as the regulator realised the financial duress under which the company was operating.

The forum and Ramoba accused the mines minister of breaching the Mineral and Petroleum Resources Development Act for “failing to act against [Lonmin] for its failure to implement the social and labour plan”.

But the department’s director-general, Thabo Mokoena, shot down that assertion, pointing to the concerted efforts by departmental officials to audit Lonmin’s adherence to its plan and their rejection of various iterations of a restated plan. This led to the one-day suspension of mining operations and eventually the more acceptable plan the company presented after working in close collaboration with officials.

Mokoena accused Ramoba of “bringing this ill-conceived application” because he had not asked for information in terms of legislation and that the matter was now subject to an unnecessary court process.

“The honourable court will be requested to show its displeasure by awarding a punitive costs order against the applicants,” Mokoena said.

The takeover of Lonmin by Sibanye means there does not have to be ministerial approval for a transfer of mining rights, a process that the department can use to lever fresh concessions from mining companies.

“The Sibanye-Stillwater allshare offer contemplates nothing more than a change of shareholders at holding company level,” Ncube said.