/ 29 September 2014

Farlam: Lonmin did not pursue housing agreement

Miners at Lonmin's Marikana mine in the North West.
Miners at Lonmin's Marikana mine in the North West.

In 2006 Lonmin announced, which much fanfare, a deal with Rand Merchant Bank (RMB) whereby the bank would fund the building of houses for the workers at Marikana. The agreement was presented for the first time at the Marikana commission of inquiry in Centurion on Monday. 

Mohamed Seedat, former non-executive director and chief operating officer until 2010 at Lonmin, is currently being cross-examined at the commission. 

Lonmin’s evidence thus far regarding the contentious issue of its broken promises to build its workers housing, has been that the financial crunch of 2008 derailed its well-intended plans. It was a claim repeated by Seedat on Monday. 

The commission has previously heard that in 2007 Lonmin undertook a survey of its workers’ housing needs. Many workers still lived in dire conditions in mining hostels and shack settlements around the mining operations. It promised to build 5 500 houses for its workers, and this was a requirement as part of its social obligations, when it applied for the conversion of its old order mining rights. 

In other words, its housing commitments were a condition of its continued operations on the North West platinum belt. 

Resentment among miners
The commission heard on Monday that Lonmin’s housing waiting list dated back to 1998. By 2008, over 5 000 miners were on the waiting list, and resentment was growing amongs workers still living in squalor. 

The 2007 survey revealed that miners believed Lonmin could not be trusted and that it broke its promises regarding housing. This survey revealed that 85% of workers preferred to own their promised houses and 15% wanted to rent. And so, when the houses did not materialise, the Department of Mineral Resources wrote to Lonmin, berating it for breaking its promises. It is not clear if this resulted in any consequences for the mine. 

In 2009, Lonmin undertook another survey. This time, most workers wanted to rent houses and not buy them. But retired judge Ian Farlam, chairing the commission, pointed out another fact revealed by the 2007 survey: Many workers said they did not understand the consequences of owning houses versus renting them. Workers asked for more information and proper consultation with the mine so that they could make informed choices. 

‘Survive’ or build houses
In any event, Seedat said by 2009 Lonmin’s financial position had changed. The 2008 global financial crunch had resulted in the crash of the stock market, and with it, the platinum price plunged. 

Seedat said this meant that Lonmin could either “survive”, or it could build houses. But it was revealed that two years prior, the RMB agreement promised that Lonmin would not have to put up the cash for the housing project. The bank had committed R318-million towards the construction of houses for the workers, and Lonmin would put up surety for the homes. 

Seedat said this surety was only in the event of retrenchments. But the agreement did not materialise and Lonmin cannot explain why. Seedat only arrived at Lonmin in 2007, a year after the agreement was announced. He said on Monday that he had tried to find out why the agreement was never pursued by Lonmin, but he was unable to find any information.

The R318-million agreement with RMB would have financed the construction of 3 000 houses.