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Lonmin committed to R500m expenditure on employee apartments

7th April 2017

By: Martin Creamer

Creamer Media Editor

     

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Platinum mining company Lonmin is committed to spending R500-million over five years on its Infill Apartment Project, which develops the areas between converted hostel blocks.

In 2014, all 128 single-sex hostel blocks were converted into renovated single and family apartment blocks at a cost of R387-million.

By using the space available between converted hostel blocks, Lonmin is able to access the paid-for bulk infrastructure around the converted hostels, which softens the cost blow during this current austere period the platinum business is traversing.

The infill apartments make use of the power, water and sewerage infrastructure already laid on, allowing accommodation progress to be made even in the current low platinum price environment.

“We’re confident that the half-a-billion-rand investment that the board has committed itself to making over a five-year period will indeed be met and that, at the end of that period, we will have built just over 1 200 infill apartments,” Lonmin Platinum executive for VP human resources Abey Kgotle told Mining Weekly at a media briefing earlier this year, when he made it clear that Lonmin had not yet resolved its housing problem, which Lonmin CEO Ben Magara described as being bigger than what the company can do on its own.

In recent years, Lonmin’s focus on achieving a series of sustainable, integrated housing initia- tives has led to the company and the majority Association of Mineworkers and Construction Union (AMCU) undertaking a joint review of employee living standards as part of a new human settlements strategy.

The joint strategy review, which will involve conducting an employee accommodation census, is expected to be completed in the next 6 to 12 months.

The company has come to recognise that affordable accommodation initiatives require a multitude of strategic partnerships with property developers, providers of capital, microlending institutions and local municipalities, as well as the provincial and national governments.

This is borne out by fewer than a third of the homes developed by the Marikana Housing Devel- opment Company for outright ownership being taken up.

The Marikana Housing Development Company, a Section 21 nonprofit entity, was established to provide affordable accommodation.

It manages the 1 149 two-bedroom homes that Lonmin has made available for outright purchase or on a rent-to-buy scheme since 2005, but, to date, only 369 people – or fewer than a third – have taken ownership of these 45 m2 homes that sell for R62 426, including the land.

The low level of sales is attributed to employees still grappling with indebtedness and their inabil- ity to access funding from banks while indebtedness persists.

As a consequence, marketing and education programmes are being ramped up to encourage employees to buy the houses.

Lonmin is also developing three collaboration projects, the Marikana Extension Two, Marikana Extension Five and the Mooinooi Collaboration Project.

At Marikana Extension Two, 292 units had been constructed by the provincial government by the close of the first phase in March last year, along with 252 community residential rental units.

The accommodation need is most pronounced among the 21 000 employees in categories 4 to 9, who receive living-out allowances.

Seventy per cent of the constructed units are allocated to Lonmin employees in these categories.

Lonmin is seeking development partnerships at Marikana Extension Five, where feasibility studies to construct units on 134 ha of unserviced land continue.

At the Mooinooi Project, rezoning and consolidation of the various serviced stands are being pursued so that the Madibeng Local Municipality can partner prospective developers in providing 2 500 high-density homes on 25 ha of available land.

Kgotle calculated for journalists at a media briefing earlier this year that an estimated 11 500 Lonmin employees still require an improvement to their current living conditions, putting Lonmin roughly at the halfway mark of providing proper accommodation.

The first phase of what is a project to build 2 600 housing units has been completed on 50 ha of land that Lonmin has donated to government.

The first phase of the infill building programme has been completed, involving 325 units at the Karee mine and steps are being taken to have those units occupied.

The 168-unit second infill phase, which began in June last year, is close to completion.

A start on the 300-unit third infill phase at Western Platinum Limited and Eastern Platinum Limited is said to be imminent.

“ I would have wanted the infill accommodation programme to be going at double the pace it is, but we just cannot afford it,” Magara told journalists.

Lonmin is going all out to find partners to help it address its pressing accommodation challenge.

It has issued an expression of interest for technical advisers and implementation partners, whose primary role will be to work with the company and organised labour on the review of the employee accommodation strategy to make sure that the needs have been properly understood.

It is making sure that it understands the accommodation preferences of its employees.

Surveys done in the past indicate that employees prefer to rent and then go back home and this needs to be confirmed prior to the development of Marikana Extension Five and the Mooinooi Project.

On the employee indebtedness issue, Lonmin is reviewing every single emolument attachment order that comes through its payroll and only orders that are legitimate and at fair interest rates are paid.

The magnitude of the indebtedness problem is such that it will take years before some employees are in a position to buy a home.

“But we’re getting there,” says Magara.

The 50 ha of land Lonmin has donated to government is earmarked for the building of 2 600 housing units, the first phase of which has been completed.

Whatever solution Lonmin and AMCU arrive at in its review, a way will have to be found to address the 11 500 employees who still require improvement in their living conditions.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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