Will Lonmin’s second chance benefit people on the ground?

Published Nov 20, 2015

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It should never have come to this, but under the circumstances forced upon us, the Bapo ba Mogale community can only welcome the vote by Lonmin shareholders to raise R5.75 billion in a new rights issue.

We hear from London, where our fate is so often decided, that they voted by more than the required 75 percent margin to approve the issue of 27 billion new shares at one penny – or 21.4 South African cents. They also voted for a separate rights issue at a nominal price that even we can afford to maintain the Bapo community’s 4.24 percent stake in the company.

This vote prevents the nightmare scenario of Lonmin’s immediate collapse, which would have left the Bapo, who host Lonmin’s notorious Marikana mine, scrabbling through the wreckage to salvage whatever we could.

Serodumo Sa Rona and the Bapo Liaison Committee have tried since that tiny stake was thrown to us last year to oppose the terms on which Lonmin took everything we had – our royalty right, our 7.5 percent share of the Pandora joint venture, and all of our land in return for a shareholding that was worth barely R25 million yesterday morning.

In June we applied to the North Gauteng High Court in Pretoria for a review of the transaction on the grounds that it was made without reasonable disclosure of the terms and in violation of customary and common law requirements for consultation. We wish to reiterate our call for the review of the equity agreement in its current form, because it does not have anything for the community, except for long-term regrets.

Now that Lonmin will live at least for another year or two, the owners must honour their responsibility to the community.

We want the existing deal reviewed and renegotiated, and we want structures put in place to ensure that whatever we do get from the mining on our land goes to the 35 000 members of the community and not, as now, to a handful of its leaders and their cronies.

Last year’s deal was done only to ensure that Lonmin would reach the black economic empowerment threshold imposed in terms of the Mineral and Petroleum Resources Development Act. In the same way, yesterday’s vote to protect our sliver of Lonmin’s equity was only to ensure that the company remains compliant. To prove that Lonmin’s motives are self-serving, the company has announced as part of this rescue process it will ask the government for permission to reduce its commitments in terms of the Social and Labour Plan (SLP) that was a condition of its licence.

The Marikana commission heard that Lonmin had reneged on nearly all the conditions of the original SLP – and now they want to lower the level of their promises even further.

Trouble

Lonmin is in trouble, because Lonmin has been so badly managed. But the disruption to our lives here on the ground is exactly the same, whether Lonmin wins or Lonmin loses. And the company still has the right of first refusal on every piece of our land: they can do whatever they want to on all the farms we own by right of inheritance and, often, because our forefathers spent every penny they had to buy it back from the colonial masters of the time.

Lonmin and the traditional council that claims to speak on our behalf are still fighting tooth and nail to keep secret the terms of the agreement in which they bought that right from us. The people living in the dust of the mines still don’t know where the little bit of money the community earns goes to.

Shareholders have given Lonmin a second chance – largely, we are told by analysts in London and Sandton, because the company left them with no option but to follow their rights or see their stake dissolved to nothing.

We believe this is a second chance also to level with the community, to make sure that ordinary people – and not just the chiefs and their children – benefit from whatever good may come of the new rights issue.

We hear, also, that Shanduka – the company Lonmin paid to lend its blackness to the mine’s equity target – is about to walk away from a debt of more than R5bn.

We said then that the stake given to Shanduka should have been given to the people. That deal was structured on a promise of dividends that never came.

It was a deal that could have been offered to the people.

If Lonmin needs to rebuild its equity ratio, we expect that it will come to the people first with a similar no-risk deal.

If the company collapses in a year or two we will have nothing anyway. If Lonmin survives and its share price recovers then we, far more than any black billionaire, deserve to ride that wave. And we will be happy to pay off the loan from the dividends that would become due to us.

* Kholisile Dingiswayo represents the Bapo Liaison Committee and the Serodumo Sa Rona community-based organisation in Bapong.

** The views expressed here do not necessarily reflect those of Independent Media.

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