Marikana: Loan undermines Lonmin’s arguments, says academic

During hearings of the Marikana Commission, Lonmin executives said the company had not been able to afford to keep its 2006 promise to build 5 500 new houses for workers.

Yet a year later, in 2007, the World Bank’s International Finance Corporation made finance of $150-million available to Lonmin – part of it for a “large-scale community development programme”. 

In terms of commitments made under the Mineral and Petroleum Resources Development Act , Lonmin undertook to convert all its single sex hostel accommodation and to build an additional 5 500 houses for migrant workers by September 2011.

In the first three years, 3 200 houses were to be built and 70 hostels converted. But by the end of the 2009 financial year, only three of the 3 200 houses had been built and only 29 hostels converted.

Lonmin executives told the Marikana Commission that the company had not been able to afford to keep its promise because of the 2008 financial crisis.

Yet in 2007, finance of $150-million had been made available to Lonmin by the International Finance Corporation and the company had apparently promised to use some of it to build houses.

The IFC, which is an arm of the World Bank, announced in March 2007 that it would spend up to $50-million (roughly R550-million at today’s exchange rates) to buy shares in Lonmin, and would also give the company a $100-million loan repayable over 10 years.

The three year IFC-Lonmin project was to consist of the development, expansion and mechanisation of Lonmin’s South African mines, as well as the development of a “comprehensive, large-scale community and local economic development” programme.

Undermining Lonmin’s argument
In a press release at the time, Lonmin’s chief executive Brad Mills said: “Our partnership with IFC will help to enhance Lonmin’s continued commitment to the long-term sustainability of our local communities and to allow us to build on our ongoing work to create mutually beneficial relationships with these communities“.

“We look forward to working with Lonmin and its stakeholders toward encouraging community development,” said Rashad Kaldany, IFC Director of Oil, Gas, Mining, and Chemicals, in the same press release. “IFC and Lonmin share the objective of maximizing the benefits from mining operations to help improve people’s lives in Africa.”


Mills told Business Day that Lonmin would use part of the cash to build 5 000 houses in the next five years for community members, with 600 scheduled to be built the same year.

“The availability of World Bank money, which a Lonmin exec said would be used for building 5 000 houses between 2007 and 2011, undermines the case that Lonmin ‘couldn’t afford’ to build more than three such houses,” says Patrick Bond, director of the University of KwaZulu-Natal Centre for Civil Society.

The IFC seems to have been satisfied with Lonmin’s track record, noting at the end of the project: “IFC and South Africa’s Lonmin recently completed a three-year partnership that helped transform the way the world’s third-biggest platinum miner operates.”

In their report to retired judge Ian Farlam this week, the Commission’s evidence leaders dismissed Lonmin’s affordability argument as “ultimately irrelevant”. The obligation to build houses was legally binding under the Act, they said, and Lonmin had made no application to the government to vary these obligations.

They also noted that the housing would have cost R665-million and that over the same period Lonmin had paid more than R1.3-billion in “marketing commissions” to Lonmin Management Services and/or a Bermudan subsidiary, Western Metal Sales.

At the time of publication the IFC’s Johannesburg office had not yet responded to a request for comment. Comment will be added when it is received.

This article was originally published on GroundUp.

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever. But it comes at a cost. Advertisers are cancelling campaigns, and our live events have come to an abrupt halt. Our income has been slashed.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years. We’ve survived thanks to the support of our readers, we will need you to help us get through this.

To help us ensure another 35 future years of fiercely independent journalism, please subscribe.

Mg Correspondent
Guest Author
Advertising

Where is the deputy president?

David Mabuza is hard at work — it’s just not taking place in the public eye. The rumblings and discussion in the ANC are about factions in the ruling party, succession and ousting him

Zuma turns on judiciary as trial nears

Former president says pre-trial correspondence is part of another plot

High court declares Dudu Myeni delinquent

Disgraced former SAA chairperson Dudu Myeni has been declared a delinquent director by the...

SANDF inquiry clears soldiers of the death of Collins Khosa

The board of inquiry also found that it was Khosa and his brother-in-law Thabiso Muvhango who caused the altercation with the defence force members
Advertising

Press Releases

Covid-19 and Back to School Webinar

If our educators can take care of themselves, they can take care of the children they teach

5G technology is the future

Besides a healthcare problem Covid-19 is also a data issue and 5G technology, with its lightning speed, can help to curb its spread

JTI off to court for tobacco ban: Government not listening to industry or consumers

The tobacco ban places 109 000 jobs and 179 000 wholesalers and retailers at risk — including the livelihood of emerging farmers

Holistic Financial Planning for Professionals Webinar

Our lives are constantly in flux, so it makes sense that your financial planning must be reviewed frequently — preferably on an annual basis

Undeterred by Covid-19 pandemic, China and Africa hold hands, building a community of a shared future for mankind

It is clear that building a community with a shared future for all mankind has become a more pressing task than ever before

Wills, Estate Administration and Succession Planning Webinar

Capital Legacy has had no slowdown in lockdown regarding turnaround with clients, in storing or retrieving wills and in answering their questions

Call for Expression of Interest: Training supply and needs assessment to support the energy transition in South Africa

GIZ invites eligible and professional companies with local presence in South Africa to participate in this tender to support the energy transition

Obituary: Mohammed Tikly

His legacy will live on in the vision he shared for a brighter more socially just future, in which racism and discrimination are things of the past

The best local and international journalism

handpicked and in your inbox every weekday