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Lonmin could 'easily' have afforded R12 500 - report

Jun 02 2015 21:15
Thomas Hartleb, News24

Economist Dick Forslund and Amcu leader Joseph Mathunjwa. (Thomas Hartleb, News24)

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Johannesburg – Platinum miner Lonmin [JSE:LON] could easily have afforded to pay its rock drill operators the R12 500 monthly salary they demanded in 2012 if it had the “political will” to do so, according to a report released on Tuesday.

If the company had used share based payment expenses (SBPE) to its management, and sales commission it paid to a subsidiary in Bermuda, it could have done so “with ease”, said Dick Forslund, a senior economist at the Alternative Information Development Centre, at the release of a report on Lonmin’s “profit shifting”.

EFF member and lawyer Dali Mpofu, and Association of Mineworkers and Construction Union president, Joseph Mathunjwa, were also at the briefing.

Forslund estimated that from 2010, the SBPE averaged about R100m per year. This could have added another R2 000 to the salaries of an estimated 4 200 rock drill operators. He was not sure if this figure included contract workers or not.

The commissions paid from Lonmin subsidiary Western Platinum to Bermuda-based Western Metal Sales amounted to about R250m per year since 1999, and could have added another R3 500 to the rock drill operators’ salaries. He referred to this Bermuda company as “basically a bank account guarded by lawyers”.

“Then you can with ease satisfy the demands of the rock drill operators if you change the cash flow in this company and if you have the political will to do so,” Forslund said.

He based his research on Lonmin's financial reports from 1999. His report is titled 'The Bermuda Connection: Profit shifting, inequality and unaffordability at Lonmin 1999-2012'.

“Complete disclosure of all financial statements of the daughter companies [subsidiaries] of these multi-national corporations are necessary, and we hope this will come up in the wage talks in the gold mining sector,” Forslund said.

lonmin  |  mining
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