Board Initiative 5: Housing and accommodation

Key features

  • 23 hostel blocks converted in 2013.
  • 107 hostel blocks converted between 2008 and 2013, providing accommodation for 2,439 employees.
  • 1,171 employees accommodated in Lonmin homes, 297 sold so far.

Context

South Africa's historically entrenched system of migrant labour in the mining industry has meant that – for many decades – unskilled and semi-skilled employees were recruited largely from rural areas across southern Africa. This migrant labour system lies at the root of one of the more complex social problems facing the southern African mining industry today. Historically, mineworkers were accommodated in high density single-sex hostels.

Over the past decade and more, there has been a substantial move by Lonmin to accommodate employees in modern, lower density single and family accommodation that employees can rent at an affordable rate. This transition has been supported and, latterly driven, by the requirements of the Mining Charter.

This conversion of existing structures has meant that fewer people can be accommodated in these facilities.

Further, in response to union requests to offer employees accommodation choices, and to encourage employees to seek their own accommodation, the industry introduced living-out allowances - a monthly subsidy that can be used to pay rent or buy housing of choice. While this has proved a popular choice for employees, the unintended consequence has been that many employees have chosen sub-standard accommodation and food/nutrition in informal settlements owing to expedience, a lack of choice or as a result of affordability.

Marikana Housing Development Company and other partnership initiatives

As part of our support for the Presidential Initiative to improve living conditions in Rustenburg, we donated 50 hectares of land in Marikana to the Department of Human Settlement, on which a further 850 serviced stands will be able to be built.

Housing and accommodation for all

The challenge of providing decent housing and accommodation to employees, their families and our surrounding communities is one of immense proportion, and mirrors the housing shortages evident at national and regional levels, particularly in government-identified priority areas.

Addressing this issue must involve collaboration between the mining industry as a whole, government and other role players, with employees also taking and making responsible choices.

Challenges

Among the challenges we face in this regard are:

  • Little or no interest in relocating, or home ownership, particularly by migrant employees and, indeed, the continued intention of migrant employees to settle in the areas of their traditional homes when they retire.
  • The proliferation of informal settlements.
  • The increasing incidence of second families near the place of work.
  • High levels of employee indebtedness, combined with reckless lending, which also limits employees’ creditworthiness and their access to home finance, now and in the future.
  • Rising costs of building new houses, and rising costs of renovating and maintaining existing accommodation.
  • Lack of land and infrastructure in which to develop new housing projects, combined with severe municipal service delivery constraints.
  • Continued migration of people to mining areas, seeking direct or indirect employment.
  • A lack of infrastructure in and around local communities.
  • Lack of capacity in the local municipalities.
  • Unaffordability of housing, both to own and to rent.

Our approach to the challenges: Integrated Human Settlement Strategy

Despite the above challenges Lonmin has made housing and accommodation a Board initiative because it recognises that, if done correctly, access to housing has the capacity to change people's lives. The access to decent living conditions is a basic human right, which affects numerous areas of human settlements including health and family relationships. This vision forms part of a larger integrated plan to enhance employee and community value propositions.

Our Integrated Human Settlement Strategy comprises three pillars:

Transforming existing structures: hostel conversions

There are 1501 hostel blocks on our property. Of these, 222 were converted between 2003 and 2008. Between 2008 and 2013 we converted 107 hostel blocks into both single and family units, including the 23 converted in 2013. A further five3 blocks were converted in 2011 to accommodate employees during their training sessions at the Vulindlela Training Centre in Middelkraal.

During the course of 2013, we converted 23* hostel blocks at a cost of R81 million (2012: R87 million). Our budget for hostel conversion in 2014 is R93 million, to complete the conversion of our final 21 hostels.

Track record of hostel conversion

Accommodation blocks on our property as at end of financial year 2013 150
Converted blocks prior to 2008: 22
Wonderkop hostel conversions 18
Hostel conversions at EPL 4
Target 1284
Vulindlela training centre conversion of hostel blocks to accommodate trainees 5
Conversions in 2008 5
Conversions in 2009 0
Conversions in 2010 5
Conversions in 2011 26
  FY125 CY125
Conversions in 2012 19 24
  FY136 CY13
Conversions in 2013 23 21
  FY14 CY14
Total blocks that will be converted in CY 2014 21 18
  1. 1 We reported 146 blocks in previous reports, however this did not taken into account the four hostel blocks we converted prior to 2008 at our EPL operations.
  2. 2 We reported four hostel block conversions at our EPL operations in 2004, but we further converted another 18 blocks at Wonderkop between 2003 to 2008.
  3. 3 These were not previously reported, as it is a different type of accommodation to the standard hostel block conversion to family and singly unit accommodation.
  4. 4 In 2008 we reference a hostel conversion target of 114 and in later years, 128, without giving our readers a proper explanation. Initially we set a target of converting 114 blocks as we were not going to convert the Middlekraal hostels due to their location, which made it difficult to integrate the hostel conversions into any existing community. However as we progressed and set out a commitment to convert all hostel blocks we made the decision to convert those blocks that are located in Middlekraal.
  5. 5 Our Sustainable Development Reports report according to our financial year, from 1 October to 30 September. However, we report to the regulator according to the calendar year, 1 January to 31 December. For this reason, the numbers contained in each report are not always the same.
  6. 6In our 2012 Sustainable Development Report, we reported the completion of 19 hostel block conversions, but we converted an additional 5 blocks at the end of the 2012 calendar year. These are included in the number reported in the 2013 financial year.

During the course of financial year 2013 we completed 23 converted hostel blocks, two of which were completed in early October 2013. We will complete the remaining 21 hostel conversions by the end of 2014, in line with our SLP commitments and Mining Charter requirements.

The provision of affordable housing: home ownership

A total of 1,149 houses have been constructed in Marikana for sale to employees since 1999, under the Marikana Housing Development Company, which was set up for this purpose in 1998.

297 (25%) of these houses have been sold to date. The purchase price of a house is around R62,500 and we offer discounts on the purchase price. Financial advice and assistance is available to employees who need help in financing their home ownership.

In addition to the 1,149 houses in Marikana, we built 369 houses next to Karee mine and 280 in Wonderkop between 2000 and 2004, bringing the total number of houses that we have built to 1,798. These houses are rented out to employees and community members.

Despite our efforts to encourage home ownership, it remains the least popular option among our employees.

Living out allowance

The living-out allowance was introduced to support employees to pay for their own accommodation. 26,068 employees, 92% of our workforce, have chosen to receive a living-out allowance, which amounts to R1,950 a month, subject to the current wage negotiations.

All employees living within the GLC have access to safe, reliable and free transport to and from work, provided by Lonmin's transport service.

Planning for future housing requirements: the way forward

In total, we currently accommodate 3,610 employees in existing structures: 2,439 in converted hostels and 1,171 in Lonmin homes. Once all of our hostel conversions are complete, we will be able to accommodate an additional 508 employees, but this is still only a small fraction of our workforce.

Clearly, we will not have the capacity to directly provide accommodation for the majority of our employees. The challenges related to the living-out allowance and the resistance we have seen to localised home ownership among employees make the task of finding a solution to housing increasingly critical.

This Board initiative emphasises the priority we place on housing. We continue to seek constructive partnerships, such as those we have with the Department of Human Settlements, as well as local and municipal government, in order to meet this challenge.