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Lobby group Mining Forum SA determined to stop R5.1bn Lonmin sale

Mar 06 2018 20:51
Tehillah Niselow

Johannesburg - Lonmin [JSE:LON] faces another hurdle in its R5.1bn sale to Sibanye-Stillwater [JSE:SGL], with the Mining Forum SA threatening to file an interdict to stop the transaction and accusing the world’s third-largest platinum producer of failing to fulfil its mandatory licence obligations.

In a lawyer's letter to the minister of mineral resources in February, the non-profit organisation claimed the department did not play its oversight role in ensuring the correct implementation of Lonmin’s social and labour plan for the period 2012 to 2017.

The Mineral Resources and Petroleum Development Act (MPRDA) of 2004 requires all mining companies to submit a social and labour plan, reviewed on an annual basis, to be awarded and retain a mining licence. Commitments usually include upgrades to communal infrastructure, employee housing, skills development and promises of local procurement.  

Mining Forum SA alleges that the department's inspectorate raided Lonmin mines in the North West region in August and found that Lonmin did not comply with the commitments made in its social and labour plan of 2014 to 2018.  

The department said in November it is investigating the claims. 

In a statement on Friday, the lobby group said its court application aims to force the department to suspend or revoke Lonmin’s mining rights, based on the claims that the platinum producer is in breach of the MPRDA.

The notice has been served on seven respondents, including the minister of mineral resources, the Bapo Ba Mogale Traditional Council, on whose land much of Lonmin’s operations lie, the North West premier, the local government MEC and Lonmin itself. 

Mining Forum SA will apply for an interdict to bar the platinum producer from transferring its mining operations to a third party, should it not have received an intention of a notice to oppose its court challenge, by March 16.

“In the midst of the rampant capture of state organs, we are concerned by the inaction of the Department of Mineral Resources," said Mining Forum SA president Blessings Ramoba.

For the R5.1bn deal to go ahead with Sibanye-Stillwater, Lonmin has to be net cash positive by the time the transaction concludes. The agreement is also subject to regulatory approvals. 

The platinum producer has been battling financial problems since 2012 as a result of the weak platinum price and rising costs.

Lonmin reported a 65% drop in 2017 profit in January as the company took a R13bn impairment charge after a decision to restructure the business.

The Lonmin sale is just one of the many items on new Minister of Mineral Resources Gwede Mantashe’s to-do list, which includes briefing Parliament about business rescue plans for Optimum Coal this week and completing a new Mining Charter within three months. 

Lonmin’s group head of communications Wendy Tlou said by SMS to Fin24 that the platinum producer remains committed to its social and labour plan programme, and Sibanye-Stillwater has also promised to fulfil all Lonmin’s obligations to surrounding communities.

Tlou added that the board supports the sale to Sibanye-Stillwater as they believe the combination of the two companies will create a more “resilient” firm better able to withstand low commodity prices and foreign exchange volatility.

Tlou confirmed that shareholders will not be voting on the sale to Sibanye-Stillwater at the annual general meeting on March 15; instead, a date for a special meeting to vote on the transaction will be announced in due course.

The Department of Mineral Resources said it is unable to comment on the pending court action as the legal team still needs to communicate with its lawyers.

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sibanye-stillwater  |  lonmin  |  mining  |  companies  |  platinum
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