Lonmin said it will increase ownership by black South Africans as the platinum producer seeks to meet the country’s year-end deadline for 26% of stock to be held by locals.
Lonmin will pay the Bapo ba Mogale traditional community R564-million to waive its rights to royalty payments from the miner’s two operating companies, together known as Lonplats, the Johannesburg-based producer said in a statement on Wednesday.
The Bapo will use those funds to buy about 13-million Lonmin shares and the company will transfer 0.9% in the two mining units to a development trust, it said. Lonmin’s Eastern Platinum will buy 7.5% in its Pandora venture with Anglo American Platinum from the community.
The transactions will increase “the black economic empowerment status of Lonplats by 3.3%,” the company said. Lonmin plans to further implement community and employee ownership trusts that will “collectively hold the 4.7% balance of the additional 8% equity empowerment” the company needs to attain by December 31, it said.
South Africa enacted a Mining Charter in 2004, compelling operators to sell 26% of their local assets to black citizens by 2014 as a way to eradicate the wealth disparities created during white segregationist rule, which ended in 1994.
Black citizens held 18% of Lonmin’s assets before these transactions, company spokesperson Sue Vey said by phone.
The Bapo ba Mogale would be required to retain the shares for at least 10 years, and the R149-million the community will be paid for this is included in the transaction price, Lonmin said. The group is also due R20-million in each of the next five years “to pay the administrative costs of running, controlling and directing the affairs of the Bapo,” the company said.
The transactions and the proposed share-ownership plan are expected to be completed in the final quarter of 2014, Lonmin said.– Bloomberg