Lonmin still has long road ahead to win back stakeholders

Warren Thompson -24 January 2017-01-24

Following a year in which the company refinanced itself and returned to profitability on a unit cost basis, Lonmin is still wrestling with the ghosts of the past as it aims to step up promises it made in the aftermath of Marikana.

In a press briefing held on Friday, January 20, 2017, the company said that efforts to fulfill its housing obligation as agreed upon with government had been curtailed by the platinum price. Lonmin had committed to building 1 200 units as part of the plan to provide decent accommodation for its employees by the end of 2018.

Executive vice president for human resources, Abey Kgotle, told Moneyweb they will build 300 units this year, adding to the 493 units that have been completed or are nearing completion at present (see video). The company has also donated 50 hectares of land to the government to assist with the provision of housing to the wider community.

This will require 400 units to be built in 2018 in order to reach the agreed target by the deadline of December 31. The units being built now are referred to as ‘infill apartments’ as the conversion of hostels is complete. The word ‘infill’ is a rather unflattering term for apartments built within the parameters of, and utilising the bulk services provided for, the old hostels.

The chairman of the Benchmarks Foundation, Bishop Jo Seoka, has promised to hold the company to account at its annual general meeting (AGM) which is to be held in London later this week. “My attendance at Lonmin’s AGM is to expose the lie that Lonmin has fulfilled its obligations of meeting workers’ housing needs, improving their living conditions, or implementing a living wage,” said Seoka via a press release on Monday.

Lonmin CEO Ben Magara lamented the lack of trust between key stakeholders in the mining industry – most notably between business and government.

When asked by Moneyweb whether this should take the form of a Truth and Reconciliation Commission for the industry, Magara said “I think the key thing is to share the same facts, have the same information. That’s possibly the journey we have to travel. Is it a Truth and Reconciliation Commission, or is it sitting down and realising the impact of what this is doing to the economy and ourselves, and to everybody. We have not paid a dividend in five years but of the money, Lonmin has generated has accrued to employees and government.”

Shareholders who recently stumped up money for the last share raising will be eager to see a return. So all round, Lonmin still has some convincing to do to win back the trust of stakeholders. – Moneyweb