Relationships with government

Improving relationships with government

Relationships

Context

Mining and beneficiation are highly regulated industries and require close interaction with a broad range of regulators. Many of the challenges facing Lonmin and the platinum industry are closely linked to the broader systemic socio-economic issues facing South Africa and cannot be solved by the Company in isolation. The needs of the local community and the priorities that Lonmin seeks to address through its SLPs are aligned with national priorities and can only be effectively achieved in collaboration with government. Maintaining a good working relationship with the South African government is important to Lonmin, not only because its operating assets are located entirely in South Africa, but also due to Lonmin’s vision of shared value.

This chapter overlaps and corresponds with the preceding four material focus chapters and highlights the need to partner with the three tiers1 of government to find sustainable solutions to the challenges facing the country. The three tiers of the South African government include national, provincial and local governments. While Lonmin is committed to driving sustainable change in the areas it can directly affect, the responsibility for broader change and development is shared with government, at all levels. As a regulator and socio-political leader, government creates the environment for business growth and development to thrive or die.

1 Local/(municipal) provincial and national.

Employee and government relations

Our ability to build strong relationships with employees and unions is adversely impacted by shortcomings in community infrastructure and service delivery failures that negatively affect employees’ home environments. While Lonmin acknowledges its responsibility to support development in local communities and drive the solution to reasonable accommodation, improving our employees’ home environment requires a thriving profitable business and collaborative partnership with government.

The Mining Charter compels companies to assist their employees in improving living conditions. Rightfully so, this ensured that single-sex hostels were converted into family units by the end of 2014. Lonmin complied with the Mining Charter requirement and also contributed 50 hectares of serviced land to the Provincial Human Settlements Department. Government has built housing in Marikana Extension 2 and some employees from Lonmin will be beneficiaries in the leased accommodation.

Safety, health and government relations

The safety and health of our employees is one of Lonmin’s most important concerns. In recent years, Section 54 safety stoppages were imposed more frequently across the industry, more broadly applied across operations and took longer to uplift. Lonmin participates in industry-wide initiatives and is part of the mining leadership declaration agreement which aims to minimise production disruptions.

Our clinics and hospitals support government priorities in community health through various awareness and outreach initiatives, particularly in the areas of tuberculosis and HIV/Aids. Detail on these initiatives is available in the safety and health chapter.

Social licence to operate and government relations

The MPRDA requires a five-year SLP that is approved by the DMR. The SLPs include initiatives that Lonmin has to deliver against as part of its legal and social licence to operate, and focus on transformation and socio-economic development initiatives aimed at improving socio-economic conditions of employees and communities. The detail of Lonmin’s SLP projects.

Environmental matters and government relations

Lonmin’s daily activities are regulated by more than 50 environment-related licences, authorisations and permits. Building sound relationships with government supports the practical implementation of environmental policies in a spirit of collaboration and acknowledgement of the Company’s specific context and challenges. Further information on Lonmin’s legal obligations under the various environmental regulations that apply to the Company’s operations is available in the environmental chapter.

Engaging with government

Lonmin engages with the three tiers of government at all levels of the Company, as appropriate to the nature of the engagement. For example, engagements with the DMR’s safety inspectors will involve operational safety representatives, but engagements regarding Mining Charter compliance are the responsibility of the Executive Vice-President for Human Resources and Executive Vice-President for Communications and Public Affairs.

Lonmin also engages with government through various business and industry organisations to ensure that the Company’s positions on matters of importance are represented at the correct level of responsibility.

Driving compliance

The mining industry operates within a regulatory context that includes a vast array of laws, government policies, guidelines and frameworks. Representatives from a range of government departments engage with Lonmin on a regular basis to monitor implementation and compliance with these requirements.

Review of Mining Charter obligations

All holders of mining rights in terms of the Mineral and Petroleum Resources Development Act (MPRDA) are measured against the targets set in the Revised Broad-Based Socio-economic Empowerment Charter for the South African Mining Industry, 2010 (the Revised Mining Charter). The targets support transformation and socio-economic development in the mining industry, covering nine areas. These include promoting meaningful economic partnership by HDSAs in the mining industry through ownership, employment equity, skills development, preferential procurement and enterprise development provisions. Socio-economic development is driven through provisions to improve housing and living conditions for mineworkers and promote community development. Sustainable development commitments include environmental management compliance, health and safety, and capacity and skills aspects. The Mining Charter also aims to promote local beneficiation in line with government’s mineral beneficiation strategy.

Lonmin continues to improve its performance against the targets set by the Mining Charter and submitted its annual scorecard report to the DMR for the 12 months ended 31 December 2014, as required.

The Mining Charter is scheduled to be replaced by a new Charter still to be negotiated between industry stakeholders. It is anticipated that the new Charter will be finalised in 2016. In the interim, the targets contained in the current Mining Charter continue to apply.

Social and labour plans (SLPs)

The MPRDA also requires the submission of SLPs to the DMR. The SLPs cover a five-year forecast period and include initiatives Lonmin has to deliver on as part of its legal and social licence to operate. It is drawn up in close collaboration with community and government representatives to address key challenges facing these stakeholders. Many of these projects also align with government’s social development agenda and National Development Plan (NDP) and the Integrated Development Plans from municipalities. Our SLPs focus on accelerating transformation and implementing measures to significantly improve the living conditions of our employees, host communities and major communities from where our employees originate.

Given the current economic climate, subdued market conditions and consequential downscaling of the organisation, Lonmin has commenced with the review of the current SLPs. The intended outcome of the review is to align the SLPs to the Company’s new reality by way of revising our commitments via a Section 102 application to the regulator as per the MPRDA.

Further detail on Lonmin’s SLP projects.

Mining and prospecting rights

Lonmin’s primary legal licence to operate is its mining rights issued in terms of the MPRDA. The Company was granted new order mining rights for its core operations that continue to 2037 and are then renewable to 2067. The ongoing benefit of these mining rights depends on the Company complying with the requirements of the MPRDA, including continuing to substantially meet the targets set by the Revised Mining Charter.

Numerous other licences apply to various areas within our operations, such as our water use licences, and atmospheric emissions licences.

Lonmin has processes and controls in place to ensure it complies with the requirements of its operating and legal licences, and undergoes regular internal and external audits to verify this. As importantly, the Company is committed to ensuring that it retains its social licence to operate, as discussed in the initiatives described in the chapter on social licence to operate.

Government priorities

Lonmin recognises that its stakeholder group encompasses more than those individuals and groups it has direct interaction with and includes broader society. The Company is committed to investing in initiatives that align with South Africa’s developmental goals to contribute to a better future for all. We engage closely with government to ensure that, as far as possible, our socio-economic development commitments align with the country’s broader overarching goals.

To fast-track the issues that have been highlighted by the National Development Plan, the government has announced Project Phakisa for mining. This is a government initiative that will accelerate the delivery of some of the development priorities for the mining industry and local communities.

The Framework Agreement for a Sustainable Mining Industry

Lonmin is a signatory to the July 2013 Framework Agreement for a Sustainable Mining Industry, also known as the Peace Accord. This agreement, signed by government, labour and business, defines the roles of each party and outlines their commitments. The Peace Accord highlights the need to improve the working and living conditions of mine workers, and accelerate transformation to redress the historical imbalances, legacies and inequalities in the mining industry.

The improvement areas outlined in the agreement are addressed through the Company’s commitment to transformation and its investment in improving accommodation and contributing to the socio-economic development of local and labour-sending communities.

The National Development Plan (NDP)

Lonmin supports the South African government’s NDP and is committed to playing its part in achieving its goals. The NDP aims to eliminate poverty and reduce inequality by 2030, prioritising employment through faster economic growth and improving the quality of education, skills development and innovation. Our socio-economic development initiatives are established after engagement with communities and government representatives to address community needs while aligning with the NDP and regional IDPs.

Local infrastructure development

Many of our community development initiatives focus on local infrastructure development. The Mining Charter requires that infrastructure development in terms of the SLP align with regional and municipal IDPs.

Beneficiation

Local beneficiation is an element of the Mining Charter scorecard and a key issue in the debate around resource nationalism. Beneficiation has been incorporated into the MPRDA Amendment Bill, which is currently the subject of Parliamentary debate. The Bill proposes that the Minister of Mineral Resources be granted a discretion to declare certain minerals as strategic, determine what percentage of strategic minerals are to be made available locally, set the developmental price at which strategic minerals are to be sold and decide the conditions applicable to export permits. While Lonmin supports the underlying intention of local beneficiation, it is important that the legislation as finally enacted effectively achieves these intentions while not undermining the competitiveness of the local mining industry. Lonmin is looking at ways to maximise the beneficiation of platinum, including the use of fuel cell technology.

PGM

Analysing the PGM content.

Key government departments

Lonmin works with all three tiers of government – national, provincial and local – to address community challenges. Social infrastructure projects require co-ordination and alignment between local, provincial and national priorities to ensure effective delivery. Where these priorities do not align, projects are delayed and social delivery suffers.

Lonmin interacts with a range of representatives from government departments, including those listed in the table below.


Department of Mineral Resources

The DMR regulates South Africa’s mineral and mining resources, with the objective of ensuring their optimal use and benefits to the country’s economy. The DMR is responsible for monitoring and regulating mine safety, health and environment as well as the social performance and transformation.

Lonmin and the Department of Mineral Resources

  • Lonmin’s legal licence to operate is regulated by the DMR.
  • SLPs are submitted to the DMR for approval on a five-yearly basis.
  • EMPs are a mandatory requirement to operate.
  • Performance against EMPs is regularly submitted to the DMR.
  • Occupational health and safety performance is regulated and monitored by the Mine Health and Safety Inspectorate.
  • Transformation and empowerment performance is measured against the requirements of the Mining Charter.


Department of Labour

The Department of Labour regulates labour relations in South Africa, with the objective of reducing unemployment, poverty and inequality and protecting human rights.

Lonmin and the Department of Labour

  • All employee contracts comply with labour relations legislation for fair and equitable terms and conditions of employment.
  • All employees have the right to collective bargaining, and negotiations can be facilitated through the CCMA (Commission for Conciliation, Mediation and Arbitration).
  • The Mining Qualifications Authority (MQA) facilitates and promotes employee development. Lonmin works closely with the MQA to improve and promote training.


Department of Trade and Industry

The Department of Trade and Industry is responsible for enabling structural economic transformation through the facilitation of investment in trade and enterprise development. The department administers B-BBEE.

Lonmin and the Department of Trade and Industry

  • Promotion and support of small, medium and micro-sized enterprises (SMMEs) in the GLC.
  • Promotion of beneficiation strategy.
  • Promotion of transformation in the workforce.
  • Procurement contracts based on B-BBEE status verification as part of the broader preferential procurement framework.


Department of Health

The Department of Health is tasked with ensuring all South Africans can enjoy their basic right of access to effective healthcare.

Lonmin and the Department of Health

  • Regular monitoring and reporting against compliance requirements in the provision of occupational and primary healthcare at our clinics and hospital.
  • Ongoing awareness and voluntary counselling and testing campaigns for HIV/Aids and TB.


Department of Basic Education

The Department of Basic Education is responsible for the administration, maintenance and regulation of a sustainable education system in which all South Africans have access to lifelong learning and training.

Lonmin and the Department of Basic Education

  • Monitoring of school administration in the GLC.
  • Support of school infrastructure projects.
  • Provision of a daily meal to all schools in the GLC through the National School Nutrition Project (NSNP).


Department of Environmental Affairs

The Department of Environmental Affairs is responsible for the protection of the environment and conservation of natural resources, including sustainable development and the equitable distribution of the benefits derived from natural resources.

Lonmin and the Department of Environmental Affairs

  • Environmental Impact Assessments and Environmental Management Plans are submitted for the operation of listed activities and relevant activities.
  • Legal licence to operate is framed by compliance to and implementation of various environmental acts pertaining to water, waste, air, biodiversity and land.


Department of Water and Sanitation

The Department of Water and Sanitation is responsible for formulating and implementing policy governing water in South Africa. It has an overriding mandate for the provision of water services by local government.

Lonmin and the Department of Water and Sanitation

  • Legal licence to use water operationally through the granting of a Water Use Licence.
  • Integrated Water and Waste Management Plan requirements to adhere to.
  • Bulk infrastructure projects as part of human settlements plan to address accommodation in the GLC.


Department of Energy

The Department of Energy is responsible for the transformation and sustainability of the energy sector through various regulations.

Lonmin and the Department of Energy

  • Lonmin’s energy management strategy is regulated and monitored against the Department of Energy’s Policy requirements.


Department of Rural Development and Land Reform

This department is responsible for the social and economic development of rural South Africa and land reform.

Lonmin and the Department of Rural Development and Land Reform

  • The BEE transaction with local communities was authorised by the Minister of Rural Development and Land Reform because all mineral rights are owned by government.
  • Lonmin’s community development strategy seeks alignment with the National Development Plan.
  • All development plans at local and provincial government level must find expression in the Integrated Development Plans, which we aim to achieve through our SLPs.


Department of Social Development

The Department of Social Development aims to reduce poverty and promote social integration through providing social protection and social welfare services.

Lonmin and the Department of Social Development

  • Several of Lonmin’s socio-economic development initiatives are delivered in co-operation with the Department of Social Development, specifically those that support orphans and vulnerable children and community health initiatives.