LONMIN had reached an empowerment deal with the Bapo ba Mogale community in an attempt to meet the government’s deadline for 26 percent black ownership by the end of this year, the platinum producer said yesterday.
The Bapo Ba Mogale, who settled on the mineral rich land 40km from Rustenburg in the North West 200 years ago, will receive R564 million and waive the royalties from Lonmin’s Eastern Platinum Limited (EPL) and Western Platinum Limited (WPL) units, together known as Lonplats.
The Bapo will use the funds to subscribe to 13.13 million newly issued shares in Lonmin, while 0.9 percent of the issued share capital in EPL and WPL will be transferred into a development trust for the Bapo. This will increase Lonplats’s empowerment status by 3.3 percentage points.
The Bapo voted in favour of the deal on Tuesday.
Negotiations had started in 2012, Vladimir Mogale, the spokesman for the community, said yesterday.
“This is a big achievement for us and the community is happy. We own 2.5 percent in Lonmin and this is huge in terms of value. The community will also benefit from other things like procurement.”
Lonmin has been mining on Bapo land since 1994, but Mogale said relations between the company and the community had been “chaotic”, resulting in the squandering of funds and corruption.
The Bapo called for public protector Thuli Mandonsela to conduct a forensic audit of their accounts after about R400m in royalties went missing from a provincial account.
The Bapo will also be given an opportunity to participate in the procurement and business activities of Lonplats to the value of R200m within 18 months by granting them preference in tenders to supply goods and services to Lonplats.
Ben Magara, Lonmin’s chief executive, said: “It is Lonmin’s first priority to work in the interests of all our stakeholders. We are pleased to have reached an agreement as this is testimony to developing a constructive relationship with the Bapo ba Mogale.”
Lonmin said it planned to implement an employee share ownership plan and a community share ownership trust to benefit local communities.
The Bapo will receive deferred royalties of R20m a year for five years after the completion of the deal, that will be used by the Bapo to pay the administrative costs of running, controlling and directing their affairs.
“They are getting far less than the Royal Bafokeng people at Impala Platinum,” Duma Gqubule, the founder of KIO Advisory Services, said.
About 300 000 members of the Bafokeng nation received R12.2 billion in stock in September 2006, in what was the country’s biggest empowerment deal at the time.
Mineral Resources Minster Ngoako Ramatlhodi welcomed Lonmin’s deal.
Lonmin shares declined by 1.14 percent to close at R42.51 yesterday.