Measuring the extent of Lonmin’s economic footprint

Current relations between labour and employers across the mining industry in South Africa are marked by unease and mistrust, and this lies at the crux of the industry’s current crisis. Deep-seated socio-economic issues of poverty, unemployment and compromised dignity, issues which transcend the workplace, appear to be at the root of the problem. The reliance on a single employer (the mine) and social grants in both the local mine informal settlements and the primary rural labour-sending areas of our country places ever increasing pressure on miners.

In 2013 we undertook a comprehensive study to map the demographic and geographic impacts of the economic benefits arising from our mining operations in the North West province.

Using empirical demographic analysis, the study analysed the benefit flows arising from Lonmin’s operations and identified the prominent economic linkages between employees and the local economy, as well as the social profile of Lonmin’s local communities and workforce. We commissioned an independent third party to conduct the research, in order to ensure impartiality and objectivity, and as such, protect the legitimacy of the findings in the eyes of external stakeholders.

The findings of the study confirmed the critical role that PGMs mining plays in the North West and South Africa as a whole and drew fresh attention to systemic socio-economic challenges such as financial literacy and personal debt, and the consequences of the significant populations of migrant labourers working in the North West’s platinum belt. Worryingly high numbers of people in the Greater Lonmin Community (GLC) who are not economically active and the high proportion of people who earn less than R4,800 per month suggest that many households rely on other sources of income, such as remittances or social grants.

The study confirmed that 36% of our employees originate from the Eastern Cape and 28% from the North West. 69.9% of our workforce resides in municipal wards falling within the Rustenburg Municipality, while 21.7% resides in wards falling within the Madibeng Municipality, both of which form part of the GLC. The average cost of living in the GLC amounts to R1,926 per month.

Remittances sent by miners to the Eastern Cape average between R500 and R1,000 per month. This is corroborated by data published by Statistics South Africa, and explains to some extent the low levels of willingness on the part of our employees to invest in permanent homes in the GLC, particularly when they have two families to support.

The rise in personal indebtedness was also evident from the study findings. The increase in average value of garnishee orders administered by Lonmin has risen from R686 in 2008 to R724 in 2013, while the incidence of emolument attachment orders among Category 4 – 9 employees at Lonmin has grown over the past five years from 12.6% in 2008 to 16.3% in March 2013. The low financial literacy levels in the GLC were also confirmed by the study. Refer to the financial literacy programme insert in Case study: After Marikana: beacons of change.

Many of the recommendations of the economic footprint study are already in place at Lonmin through our training and development programmes and community education and infrastructure initiatives. However, there was a significant emphasis on the need to entrench a multi-stakeholder approach to co-ordinate the development of economic opportunity on the platinum belt, including the participation of community-based and non-profit organisations. Working to advance this approach will constitute the next step in improving the economic footprint of both our Company and the industry as a whole.

Understanding and describing significant economic impacts, including the extent of impacts