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Lonmin: Five years after Marikana

Aug 16 2017 07:00
Lameez Omarjee
AMCU leader Joseph Mathunjwa and Lonmin CEO Ben Ma

AMCU leader Joseph Mathunjwa and Lonmin CEO Ben Magara during the commemoration of the 2012 Marikana massacre in August last year. (File pic: Felix Dlangamandla, Netwerk24)

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Johannesburg – Lonmin is not the same company it was five years ago, before the Marikana massacre took place. 

For one, the platinum miner has been facing financial constraints and has not paid its shareholders a dividend since 2011.

Current chief executive Ben Magara shared on the company’s financial challenges, at the Business Day Dialogue Breakfast commemorating the fifth Marikana anniversary. Lonmin has had to contend with a challenging economic environment, low platinum prices and inflationary costs. The company reported an operating loss of $181m for its interim financial results for 2017.

Lonmin has undertaken cost cutting efforts to reduce it overheads. Among these include moving its head office from Melrose Arch in Johannesburg to Marikana, in the North West province where its core mining operations take place.

“We are operating in a volatile and challenging environment, but we have the right team in place to manage these challenges,” Magara said.

Lonmin’s management has certainly changed since 2012. Magara was appointed in July 2013, taking the reins from acting CEO  and CFO Simon Scott. CEO Ian Farmer stepped down due to illness, four months after the events at Marikana took place.

Five of his six general managers are black South Africans, a reflection of the transformation that has taken place, Magara said. Being a black chief executive of the third largest platinum producer in the world also bears testimony of the transformation efforts made at the company, he said. Further, historically disadvantaged South African representation at management level is at 52.3%, according to the 2016 annual report.

“Transformation is at its height,” he said. Between 40% and 70% of procurement goes towards black business, he added.

Reflecting on Marikana

Magara said that he took on the role of CEO with his “eyes open”. He viewed the tragedy - in which 34 miners were shot and killed by police on August 16, 2012 in an apparent attempt to disperse striking Lonmin miners - as a catalyst for change, where all stakeholders in society would work to make sure something like that never happens again.

“I believed I could contribute to that… For me it was an opportunity to say, ‘If Africa can’t fix it for itself, who will do it?’”

The circumstances of the event were clear, employees wanted an increase - miners demanded that their salaries be nearly tripled to R12 500 a month - and employers were unable to pay. “There was an element of ‘winner takes all’ which drove some of the challenges seen in 2012,” he said.

Magara said that all stakeholders, government, employees, business and unions should consider the realities of the sector and create a “shared vision” to solve the challenges by fulfilling their respective roles.

The company supported the Farlam commission of inquiry, which later revealed “clear blemishes” of Lonmin, he said. These were related to its security and human resources policies. Lonmin reviewed the recommendations made regarding its policies and procedures.

Regarding security policy, Magara said that it involved considering the role of mine security, which is limited to mine property. Anything outside of that in the public space becomes a “public order policing” responsibility. The Constitution is clear that the South African police serve and protect residents. “It is important that those delineations of responsibilities are clear,” he said.

In terms of labour relations Magara said that management considered its role in engaging with employees. “Those employees were our employees before they were union members. It is the responsibility of employers to engage with its employees. Without an employer there is no union.”

Magara said that every employee had the right to freely associate with whichever union he or she pleased.

President of the Association of Mineworkers and Construction Union (AMCU) Joseph Mathunjwa said that Marikana reflected the compromises made in the Codesa discussions at the dawn of democracy, which left workers still waiting for economic liberation.

Marikana confirmed to AMCU the importance of engaging with members on the ground, he said. Following the five month long strike in 2014, all workers now have a starting salary of R10 000, excluding benefits, Mathunjwa said.

Housing

In 2012 former chairperson Roger Phillimore and Scott, in the capacity of acting CEO, acknowledged the impact Marikana had on the company’s performance. They also acknowledged that more had to be done to support transformation in the country, and to address the housing issue.

On this matter, Magara said that Lonmin is committed to spending R500m, despite its financial situation, to build between 300 and 400 units every year by the end of 2018. “I wish I could double the pace but unfortunately we just can’t do more.”

Magara said that living conditions have improved as the company and government have built better accommodation for workers.

“As I speak to you today, no employee lives in legacy single sex hostels. They are eradicated at Lonmin.

“That work is on-going, living conditions need to improve,” he admitted.

Mathunjwa said that the union is discussing that workers have a choice on the location where accommodation is built. Magara said that a survey has just been completed where 67% of employees said they would prefer housing in their places of origin and that Lonmin is considering a way forward to achieve this by working together with unions, developers, banks and government.

“We are conscious of the fact that they must have good living conditions in their working lives because their well-being is important.”

On Tuesday Lonmin announced a design proposal for Marikana Memorial Park as well as phase one and two of its infill apartments. The memorial park is to be situated between the informal settlement Nkaneng and an Eskom sub-station. The park will serve as an area for social gatherings.

The apartments will cost R410m to develop, as part of Lonmin’s R500m Social Labour Plan. The development currently has 493 units, 403 are already occupied by workers. More (300) units will be completed by December and phase four is expected to be completed by the end of 2018.

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