On the eve of a major review of a major review of transformation in the South African mining industry, the third largest platinum mining group Lonmin reported that it is making progress towards meeting demands of the Mining Charter.
As part of its quarterly update, Lonmin reported last week: “We are making good progress towards achieving compliance with our BEE obligations under the Mining Charter by 31 December 2014.”
The group added that “We intend doing this through share ownership schemes and through consultation with our employees and communities on the details of the schemes.”
We are also in discussions with the Bapo ba Mogale tribe regarding converting their royalty and their share in the Pandora operations into Lonmin equity. We plan to bring the detailed proposals in this regard to shareholders later in the year once our discussions with the various stakeholders involved are sufficiently advanced.”
Lonmin’s existing BEE arrangements include a partnership with Cyril Ramaphosa’s Shanduka Group. The investment entity led by the deputy president of the ANC, Shanduka, entered Lonmin via an entity called Incwala.
The Incwala arrangement is describes thus by Lonmin:
Incwala Resources (Proprietary) Limited is a South African registered company specifically incorporated for the purposes of enabling broad-based equity participation by Historically Disadvantaged South Africans (HDSA’s) in Lonmin Platinum.
Lonmin Plc and the International Development Corporation both own 23.56% of Incwala, with the remaining 52.88% being held by HDSA owned consortia. Lonmin Plc, facilitated, inter alia, by means of loans amounting to $33.8m in total and guarantees, the purchase by the consortia of the Incwala shares. Incwala then used these funds to purchase an 18% holding in the share capitals of Eastern Platinum Limited and Western Platinum Limited.”
In June 2006, Incwala Resources was included as an 18% shareholder in Lonmin Platinum Limpopo when we refinanced our acquisition debt and transferred the Limpopo operations into Western Platinum. In addition, Incwala Resources acquired a 26% stake in our Akanani project in July 2007.”
As a result of this arrangement Ramaphosa sat on the board of Lonmin until he was elected as the deputy president of the ANC and had to business activity that may yield conflict of interest. He resigned from the Lonmin board last year to be replaced by Shanduka CEO Phuthi Mahanyele.