BEE group in bid to scrap R664m Lonmin deal

Platinum miner Lonmin is bracing itself for a bitter fight as members of the Bapo ba Mogale community, who live on the land it mines, go to court this week in a bid to unravel its R664-million empowerment deal, pushed through three months ago.

The Bapo community has been split by the deal, which was meant to help Lonmin reach the 26% black empowerment level required by local mining laws by the cut-off date.

In the Bapo village, in the North West, death threats have been made against people who oppose the deal and houses have been vandalised.

Lonmin, which courted controversy owing to its poor handling of the standoff at its Marikana mine, which led to 34 deaths in 2012, has battled to hike its empowerment stake to 26%.

In December, CEO Ben Magara announced a new R664-million deal to push black ownership to that level. Until then, Lonmin had only 18% empowerment, which was held by Cyril Ramaphosa's Shanduka Resources. Shanduka bought that stake from Lonmin in 2004 for R3.9-billion, but Ramaphosa has been unable to service the loan because platinum companies fell on tough times.

The new deal would have seen another 8% sold to black investors, but some Bapo members were unhappy that they would get only a 2.4% stake in Lonmin in exchange for giving up their rights to royalties.

Lonmin pushed the deal through in December despite resistance from that faction of the community, which believed it was swapping a prize asset for a slim slice of future profits.

On Friday, some of the leaders opposing the deal signed a letter which the University of Cape Town's Legal Resources Centre (LRC) will hand to the High Court this week. The letter calls on the court to review the R664-million deal.

The Bapo, who settled on the land about 200 years ago, are beset by factionalism and resentment over the fact that R300-million owed to them in royalties has disappeared. The account in which the money was kept was found to be virtually empty.

Samancor and IFM also mine the community's land but have far more harmonious relationships with the Bapo.

"Samancor, IFM, those companies gave us the 26% black ownership," said Kholisile Dingiswayo, a spokesman for a section of the community. "But Lonmin, those guys that come from London to mine our platinum, they wanted to rather give it to Mr Ramaphosa. And even the little bit that they gave us, they talked to the Kgosi [the king] and his family ... they are the only ones that will see any money."

Lonmin spokeswoman Sue Vey said those opposing the deal had a vested interest in seeing it unravel.

In terms of the deal, the community would receive a payout from Lonmin's profits, or Lonmin would pay the community R5-million a year. In addition, Lonmin would make R200-million available for procurement opportunities available for the community. This could be at the expense of current contracts in place with Lonmin.

"Lonmin made every effort to ensure an inclusive process, helping the Bapo to work in close collaboration with the Department of Rural Development and Land Reform and the Department of Mineral Resources so as to ensure that the processes they followed were correct and inclusive," said Vey.

But Brendan Boyle, a former journalist at the Sunday Times who is assisting the Bapo opposing the deal, said the company had tried to take a short cut to get it done. He said Lonmin found it easier to deal with a chief than with the community.

"That brings us where we are today, where the Bapo ba Mogale are denied insight into the terms of the transaction in which the mine royalty they inherited was traded for a tiny equity share that Lonmin had to give to somebody."