/ 16 June 2016

Minister’s comments have sunk a R27m rescue deal and put Lily Mine at risk

Unrecovered: The bodies of Pretty Mabuza
Operations at Lily Mine and Barbrook, near Barberton in Mpumalanga, came to a halt after a pillar collapsed underground three years ago. (Felix Dlangamandla/Gallo)

“Lily Mine remains closed until the container is recovered.” With these words Mineral Resources Minister Mosebenzi Zwane’s words in effect sank R27-million in bridging finance to reopen the Barberton mine hit by an underground collapse.

“The department has not given the mine the right to continue mining,” he told the National Union of Mineworkers (NUM) central committee meeting in Centurion earlier this month.

The Vantage Goldfields-owned Lily Mine came under further pressure this week to recover the container in which Pretty Mabuza, Yvonne Mnisi and Solomon Nyerenda died in February. They were trapped 800m underground when thousands of tonnes of rock and debris collapsed on to the container in which they were working. 

On Sunday, members of labour federation Cosatu marched to the mine to demand that the container be recovered in three days, failing which the mine should be permanently closed.  Their demand was echoed by NUM, ANC and South African Communist Party members, who marched to the mine on Tuesday. They also demanded that workers be paid their outstanding salaries and allowances. Lily Mine was closed after the accident.

It recently secured a R173-million investment from Canadian firm AfroCan to build a decline shaft and expand production at the nearby Barbrook gold mine. 

The decline shaft will provide a safe route to where the container is believed to be. 

Last month, the Mail & Guardian reported that the mine had to ask the Industrial Development Corporation (IDC) for additional funds to build the decline shaft as it would cost R200-million. The committee responsible will make a decision on June 27. 

The mine has asked a private investor for bridging finance while its IDC finance application is being considered. 

But the private investor retracted the offer after hearing that the mine will not resume production until the container is recovered, Rob Devereaux, the mine’s business rescue practitioner, said this week.

“One of the investors was prepared to put money in for the short term but what scared them off is when he [Zwane] said that the mine would not reopen unless the container was retrieved. That was the main reason for the collapse of that bridging finance,” he said.

A source with intimate knowledge of the negotiations with the private investor said the deal was on the verge of being signed when the minister addressed the NUM’s central committee.

“One investor withdrew on Friday morning. This guy said he would not invest into a recovery operation and asked what his return would be. Recovering the bodies could take another year and it could take a further two years to pay him back,” said the source.

Compounding the financial problems are the outstanding salaries, overtime and call-out allowances owed to 900 workers since April this year, a R4.4-million compensation pay-out to the families of the three dead mineworkers and 75 others who survived the collapse, as well as a delay in processing the AfroCan investment.

The financial trouble, protests by the unions and political parties and the failed bid for bridging investment has left Lily Mine’s management in a panic. Last weekend the managers gave each worker R1 000 out of their own pockets after announcing that the outstanding payments would not be made because the mine had not yet received money from AfroCan.

Trade union Solidarity accused the NUM and government of putting the jobs of the mine’s 900 workers at risk.  “The minister and NUM are making populist remarks. They must realise that 900 people are still alive and are on the brink of poverty,” said Solidarity’s general secretary, Gideon du Plessis.

“There’s no guarantee they will ever find the bodies due to the severe impact of the collapse, so it’s totally irresponsible to call upon the closure of a mine and put 900 jobs at stake.”

The majority union at the mine, the Association of Mineworkers and Construction Union (Amcu), said it was satisfied with the company’s plan to reach the container by completing the decline shaft, and suggested that the government should pay the R4.4-million compensation to the families and surviving workers.

“Is it fair to make such an announcement while you don’t know the finances of the company? As a union we were not consulted. The minister made that commitment and, suddenly after the NUM said it expected the same at other mines, he opted to make the company pay. Whoever committed must pay,” said Amcu president Joseph Mathunjwa.

Du Plessis called on the unions and the state to stop issuing ultimatums and to help ensure the mine isn’t shut down for good. “The problem is, investors are very hesitant because there is no financial return on investing in the recovery [of the container]. The NUM and [the] minister of mineral resources must assist us in trying to secure funding.”