Improving relationships with key stakeholders

Key chapter takeaways

  • Key engagement topics with our stakeholders unpacked
  • Social responsibility activities align with government priorities
  • Lonmin’s positioning on primary regulations

Building strong relationships with external stakeholders and between management and employees is important to create constructive engagements so that all stakeholders benefit. This is particularly true when establishing strong partnerships between business, government, organised labour and community leaders to ensure that necessary steps are taken to secure a sustainable future and realise shared value for all.

This chapter provides an overview of Lonmin’s key stakeholders, with a focus on government relationships. Further information, including an overview of the method and frequency of stakeholder engagement, concerns raised and Lonmin’s responses, is available in the supplementary report on stakeholder engagement.

Accountability and Governance

The Lonmin Charter includes a commitment to deliver the requirements of the South African Broad-based Socio-economic Charter and we welcome the opportunity to transform our business. This is supported by our values of:

  • Integrity, honesty and trust – We are committed ethical people who do what we say we will do
  • Transparency – Open, honest communication and free sharing of information

Strategic approach: continuing to improve relationships with key stakeholders

Lonmin’s Safety and Sustainable Development Policy:

  • Upholding ethical business practices, sound corporate governance and transparency, while meeting or exceeding applicable legislation, standards and other requirements
  • Maintaining transparent and ongoing consultative relationships with all stakeholders and incorporating this engagement into the decision-making process

Other internal policies governing constructive engagement: government, regulatory and other stakeholders:

  • Stakeholder Engagement Framework
  • Reporting Framework

Stakeholder management is coordinated by the Executive Vice-President of Stakeholder Engagement and Regulatory Affairs who reports to the Chief Executive Officer.

Approach and Performance

Stakeholder groups are identified and prioritised using a risk-based approach that is supplemented by desktop reviews, analysis of media coverage, online sources, internal conversations and consultation sessions to improve our understanding of stakeholder views.

The primary goal of our stakeholder initiatives is to improve communication and transparency to align the Company and our stakeholders with a shared vision of a sustainable and profitable Lonmin through all cycles.

Engagement between stakeholders and the Board promotes the enhancement of the Board’s collective knowledge of economic, environmental and social topics and enables consultation and feedback. The Board engages through the Annual General Meeting (AGM) and quarterly and interim roadshows to investors in the United Kingdom and South Africa that follow the AGM. The Board visits the operations twice a year for meetings, focusing on housing, education and working conditions. Board meetings cover deep-dive topics across the areas of safety, health, environment and other topical areas.

We have re-grouped our stakeholder engagement and Regulatory Affairs Department. We allocated more resources to the department to ensure consistent professional and structured engagement.

Management, union leadership and the inspectorate formed a coalition. The intention is to share the unified message that production needs to be improved.

Key stakeholders

The content that follows defines how Lonmin engages with its main stakeholder groups and the key 2017 engagement themes. Further detail of our response to the concerns raised is included in the material focus chapters, and the Annual Report and Accounts.

Employees and contractors

The daily interactions between management, leaders and teams provide an opportunity to build trust and strengthen our relationships. Frontline supervisors and managers are supplied with information to enable them to keep employees informed and engaged. This includes communication materials on a wide range of topics, regular talking points and responses to frequently asked questions to support conversations around important matters.

Contractors are an important resource for creating and sustaining employment in and around our operations and include transient and small-scale partnerships, and long-term, large-scale relationships. Engagements with contractors happen in the daily course of business as stipulated in formal service agreements.

Unions

Lonmin supports our workers’ rights to choose their organised labour representatives and recognition agreements are in place to allow for freedom of association, within the confines of South African labour legislation. The Association of Mineworkers and Construction Union (AMCU) is the majority union at our operations.

Communities

The Bapo Ba Mogale (Bapo) community lies to the east of Lonmin’s Marikana operations. Other communities around the operations include localised and transient migrant workers from across southern Africa. More than 130,000 people live in formal and expanding informal settlements around our operations, where the socio-economic challenges arising from informal living conditions are exacerbated by lack of basic services.

At the Limpopo operation, local traditional authorities include the Mphahlele, Ledwaba and Kekana.

Formal engagement structures are in place with the Bapo traditional authority and surrounding communities to discuss the most pressing community needs, such as employment, economic development, community infrastructure programmes and the Social and Labour Plan (SLP) status. These structures take the form of bilateral forums that include specialist sub-committees.

Suppliers

Lonmin has 1,541 discretionary suppliers registered in its data base, 91% of which are based in South Africa and 9% are from the surrounding community. Discretionary spend on suppliers during 2017 was R7.87 billion. Our preferential procurement strategy requires procurement adjudication to favourably weight suppliers with broad-based black economic empowerment (B-BBEE) credentials, female representation and, where possible, companies from the surrounding community.

Customers

Lonmin’s principal customers for PGMs are all global corporations. We appreciate the importance of demonstrating good corporate citizenship as part of the global PGM supply chain and are open to customers’ feedback that aims to improve the sustainability of the Company.

Shareholders

Our top-10 shareholders are PIC, Majedie Asset Management, Schroder Investment Management Limited, Exor SpA, Shah Capital Management Inc, BlackRock Inc, Standard Life Aberdeen, Legal & General Investment Management Limited, Bapo Ba Mogale traditional community and Pictet & Cie (Europe) SA.

Our objectives are to ensure that Lonmin is positioned to withstand low commodity prices in the short to medium term; to operate on a sustainable basis; and to be able to build financial value for our shareholders and all our stakeholders. We place high value on being a responsible corporate citizen.

Media

The media plays a role in creating and shaping public opinion by generating awareness. Media acts as watchdog to protect public interest against malpractice.

Industry associations

Lonmin participates in various industry organisations that focus on addressing key concerns for the mining and metals processing industries, including health, safety and environmental matters. Participation in these forums exposes the Company to shared learnings, best practice and peer performance benchmarks. These associations offer a focal point to represent particular industry positions in negotiations with government.

Government and regulators

Government is a key stakeholder for Lonmin, and ensuring a constructive relationship at local (municipal), provincial and national level is critical for the Company to operate effectively.

Our representatives engage with government at the levels relevant 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.

During the course of business, Lonmin engages with all three tiers of government. The Company engages through various business and industry organisations, such as the South African Chamber of Mines and the National Business Institute (NBI), so that the Company’s positions on matters of importance are represented at the correct level of responsibility.

Lonmin’s Group Risk Manager and Head of Legal are in the process of setting up a compliance forum to meet quarterly to consolidate compliance across the Company.

Contributing to government priorities

Lonmin’s socio-economic development projects are derived in collaboration with government and, wherever possible, are designed to support the country’s broader developmental goals. These goals underpin various developmental frameworks, including those discussed below, which are most relevant to Lonmin.

The Framework Agreement for a Sustainable Mining Industry1
Description and purpose

The Framework outlines the commitments of each party and aims to support improved working and living conditions for mine workers, and accelerate transformation to redress the historical imbalances, legacies and inequalities in the mining industry.

1 Also known as the Peace Accord, signed between government, labour and business in July 2013.
Local integrated development plans (IDPs)
Description and purpose

Local IDPs are five-year plans for a municipal area that provide a framework for future development to coordinate the work of local government, other spheres of government and key stakeholders. All municipalities have to produce an IDP, and are responsible for coordinating the plan and ensuring that all municipal planning and projects happen in terms of the IDP.

Lonmin’s contribution

Lonmin’s Marikana operations fall under the Madibeng and the Rustenburg local municipality which lies in the Bojanala Platinum district municipality.

In line with the requirements of the Mining Charter, Lonmin’s infrastructure development in terms of our SLPs is informed by engagement with the relevant government representatives to ensure alignment with regional and municipal IDPs.

United Nations Sustainable Development Goals (SDGs)
Description and purpose

The SDGs are a set of 17 ‘Global Goals’ with 169 targets among them. They promote global partnership, and provide guidelines and targets that tackle the root causes of poverty, inequality and environmental issues. They aim to make a positive change for people and the planet in a sustainable way, for future generations.

Lonmin’s contribution

Lonmin is in the process of aligning its sustainable development agenda with the SDGs. Our activities aim to address the issues underlying these goals.

The National Development Plan (NDP)
Description and purpose

The NDP is a long-term developmental plan that sets goals for South Africa to eliminate poverty and reduce inequality by 2030, prioritising employment through faster economic growth and improving the quality of education, skills development and innovation. Project Phakisa for mining is a government initiative announced in 2015 to fast-track the implementation of solutions on the critical developmental issues highlighted by the NDP.

Lonmin’s contribution

Lonmin is committed to playing its part to achieve the goals of the NDP and our socio-economic development initiatives aim to address the most pressing community needs, which generally align with the NDP.

Local beneficiation
Description and purpose

The Mineral and Petroleum Resources Development Act (MPRDA) Amendment Bill (the Bill) grants the Minister of Mineral Resources powers, including: the discretion to declare certain minerals as strategic; to determine what percentage of strategic minerals are to be made available locally; to set the developmental price at which strategic minerals are to be sold; and decide the conditions applicable to export permits.

Lonmin’s contribution

Lonmin supports the underlying intention of local beneficiation, and it is important that the legislation, as finally enacted, achieves these intentions without undermining the competitiveness of the local mining industry.

Although the Bill has not yet been signed into law, Lonmin continues to investigate ways to maximise platinum beneficiation, for example through our sponsorship of the SPI in the North West.

Primary regulations

Mining and beneficiation are highly regulated industries, and most aspects of the Company’s activities require close interaction with regulators, including in the areas of safety, health and wellness, environment and transformation.

Mining and prospecting rights

Lonmin’s primary legal licence to operate is its mining rights issued in terms of the MPRDA by the DMR, and retention of these rights is dependent on continued compliance with the requirements of the MPRDA. Lonmin’s new order mining rights for core operations continue to 2037 and are renewable to 2067.

Reviewed Mining Charter – focus areas
  • Mine ownership
  • Employment equity
  • Skills development
  • Preferential procurement
  • Enterprise development
  • Housing and living conditions for mineworkers
  • Community development
  • Sustainable development (environmental management compliance, health and safety, and capacity and skills)
  • Local beneficiation
SLP focus areas
  • Human resources development
  • Mine community development
  • Housing and living conditions
  • Employment equity
  • Processes to save jobs and manage downscaling and/or closure

The Mining Charter

Transformation and socio-economic development in the mining industry is driven by the Broad-based Socio-economic Empowerment Charter for the South African Mining Industry (the Mining Charter), which sets targets in nine areas. Programmes in these areas aim to promote meaningful economic partnership by HDSAs in the mining industry. Mining companies report their progress against the Mining Charter annually to the DMR.

The Reviewed Mining Charter was published on 15 June 2017 and is the subject of legal dispute. The Minister of Mineral Resources gave a written undertaking that the Reviewed Mining Charter will not be implemented until the legal issues around it have been resolved. The 2010 Revised Mining Charter set targets to 2014, and these apply until replaced by the Reviewed Mining Charter.

Social and Labour Plans

The MPRDA commits mining companies to SLPs as a prerequisite to acquire mining or prospecting rights to ensure the effective transformation of the mining industry. The plans aim to promote employment and advancement of the social and economic welfare of all South Africans, while ensuring economic growth and socio-economic development.

The projects contained in SLPs are identified and planned in close collaboration with community stakeholders and local, regional and national government. Mining companies submit their SLPs to the DMR, and delivery on projects is required to retain their legal and social licence to operate.

Lonmin confirms that we have received correspondence from the DMR that highlights areas that have been identified as non-compliant and/or are behind scheduled implementation in terms of our SLP. We continue to engage with the DMR in an attempt to reach a constructive solution.

The current five-year SLP commitments expire at the end of 2018.

Breakdown of rand value spent on community SLP projects:

Close cooperation with local government is critical to ensuring socio-economic development initiatives are viable, sustainable and align with the NDP, regional IDPs and other government-driven community initiatives such as Project Phakisa. Regular engagements are held with various government departments, including the departments of Basic Education, Health, Trade and Industry, Social Development, Human Settlements and Mineral Resources, as appropriate, and with provincial and local government. These engagements provide oversight on projects implemented by the Company.

More information is available in the Community Relationships and Investment chapter.