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Recovering platinum miner forging ahead
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15th March 2013
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A one-day wildcat strike at platinum producer Lonmin’s Saffy and Newman operations on March 5 has left mine management embarrassed and disappointed, as the illegal stoppage coincided with a media tour intended to showcase the company’s road to recovery after last year’s fatal labour unrest that claimed the lives of 46 people.

Lonmin has since resumed production and continues its endeavour to ramp up safety, ensure continuous and reliable production, restore investor faith and confidence by producing saleable ounces under difficult trading conditions, create sustainable value and rebuild trust with all stakeholders through enhancing its social value proposition.

The illegal stoppage was instigated by the Association of Mineworkers and Construction Union (AMCU) on the grounds that it no longer represents the largest body of mineworkers at Lonmin. The emerging union was allegedly demanding the closure of the rival National Union of Mineworkers’ (NUM’s) offices.

However, executive VP for mining Mark Munroe told Mining Weekly at the time that AMCU had majority representation at Lonmin, although the exact number of members fluctuated, and that he believed it was no coincidence that the strike erupted at a time when there would be media coverage.

Meanwhile, in an ongoing employee-relations initiative, the world’s third-largest platinum producer has voiced its intention to define a new employee-relations dispensation, guided by the principles of inclusivity and industrial democracy.

Lonmin has been in discussions with labour unions about the new recognition dispensation, which would provide all Lonmin unions with an appropriate voice in recognition arrangements.

“Within this context, the majority union must be rightly recognised in a system that promotes inclusive representation. Discussions on a new recognition dispensation are ongoing and, therefore, we do not yet have a new recognition agreement in place,” says Lonmin management.

It adds, however, that it is aware of the dangers of a majoritarian recognition system.

“This is a complex issue and we encourage worker representatives to act responsibly and within the framework of labour legislation and the recent industry peace accord. We believe that expediency should not trump a collaborative and consensual – even if difficult – process of developing a new recognition model based on inclusivity and workplace democracy.”

Easing Into Initial Ramp Up

Concurrently, the embattled platinum miner is working on collaborative efforts with government and industry players to deliver the financial returns to justify further investment in the mine, while intensifying efforts to fast-track a business model that meets the expectations of all its stakeholders.

“It is important to note that we did not rush to start production. We used the time and opportunity, when our lower-level workers were not yet at work, to bring in the supervisors and managers, coaching and training them in preparation for the workforce’s imminent return,” says Munroe.

This preparedness included the expectation that the workers would be traumatised, malnourished and under financial stress, having lost six weeks worth of wages, owing to the strikes.

“This was the state in which the employees would return to us and we recognised that, so we empowered and trained our supervisors and leaders to cope with the situation.”

As miners returned to work, Lonmin had arranged for counsellors to help the employees deal with their individual trauma and offered short-term incentives by providing workers with an additional R200 a week to buy food.

Moreover, production did not resume in the first week after the mineworkers’ return, as shift overseers and Lonmin’s training department provided intense retraining to ensure that the workers and team leaders understood one another’s roles in the workplace.

“During the strike, the rock drill operators were ruling the roost. Obviously, this had to be reversed and we had to re-establish our operational structure for safety’s sake,” explains Munroe.

He adds that, while most shafts started operating a week after the workforce had returned, some shafts took as long as six weeks to start up again, as measures were put in place to ensure the safety of the mines.

This, says Munroe, contributed to Quarter 1 of the 2013 financial year – the three months leading up to December 2012 – being the safest quarter Lonmin has ever had. It was also surprisingly productive, considering the circumstances in which the start up took place.

“Though we lost significant production in September, owing to the stoppages, the way in which the mine came back into operation after the strike reflects hugely on the professionalism of all employees,” he asserts.

Collaborating for Stakeholder Value

Addressing Lonmin stakeholders in the mine’s ‘2012 Annual Report’, board chairperson Roger Phillimore stated that the factors contributing to last year’s tragic events at Marikana are complex, multifaceted and cannot be solved by Lonmin alone.

“The mining industry is at a crossroads. We need a more collaborative model for decision- making to resolve problems and disagreements before they turn into tension and distrust,” he said, adding that Lonmin was committed to a process of fundamental change to rebuild trust with all stakeholders.

Phillimore also asserted that Lonmin’s board was determined to improve the creation of value for all its stakeholders and, in so doing, enhance the company’s long-term wealth-creation and investment potential.

Munroe says this solution is necessary – not only for mining companies but also for any large business wanting to succeed in South Africa.

As part of its strategic review, Lonmin is considering the implementation of an employee-share ownership scheme, which, he says, is significantly more complex in an environment of turbulent union dynamics such as Lonmin’s.

“This would be a challenging endeavour, but we are committed to exploring it,” he says.

The platinum miner officially announced its plans to transfer broad-based black economic-empowerment equity to employees last week, telling The Sowetan that the ESOP would be rolled out next year and would bring the company’s broad-based black economic-empowerment ownership to 26%.

Lonmin management is also reviewing the viability of alternative shift and leave schedules for those employees who are not based in the greater Lonmin area to return to their families more often than what they had done in the past.

The company has established an internal team, comprising stakeholder employees and external experts, to deal with the issue of subverting the local mining industry’s 100-year-old history in terms of work practices and the changing dynamics between migrant and local labour.

Migrant labour issues play a significant role – not only in the dynamics underground but also in the future of Lonmin’s human settlements initiatives.

Housing, Accommodation and Sustainability

About 90% of Lonmin’s workforce comprises migrant labourers, which refers to anyone who is not indigenous to the greater Lonmin community, and, therefore, the motivation behind the consideration of alternative shift and leave patterns.

Process division executive VP Natascha Viljoen explains that this significantly impacts on the accommodation requirements of Lonmin employees, as management needs to consider that some will have taken on second wives and families – a legacy of the migrant labour system.

She says that, while the company is making headway in terms of converting traditional hostels into comfortable single and family units, the housing shortage is still a challenge.

Lonmin has implemented a long-term integrated human-settlement strategy, enabling the company to meet its social and labour plan housing commitments, the aim of which is to have 128 hostel blocks converted by 2014.

To date, 60 hostel blocks have been converted and 64 still have to be renovated. These conversions have already benefited 1 048 individuals and 612 families.

Nevertheless, while Lonmin is currently in dialogue with government, local municipalities, developers, funders, unions and stakeholders with regard to implementing future housing projects, only 3 000 of its employees are living in hostels, with a further 2 000 waiting for accommodation.

Viljoen explains, however, that there is a lot to take into consideration and concedes that the company has not yet found solutions to many of the quandaries pertaining to housing and accommodation.

“Part of the initiative of creating sustainable communities is to consider what a sustainable community looks like,” she avers, adding that building single quarters is not always sustainable, as many workers eventually require family units.

Viljoen further highlights that Lonmin needs to consider life after the mine and how to develop self-sustaining communities to avoid building infrastructure for future ghost towns.

“Essentially, this is not a permanent living area. The moment the mine shuts down, you stand the chance of losing all that infrastructure that you spent money on developing,” she says.

Viljoen adds that, upon announcing its housing initiatives, Lonmin was criticised for its lack of clarity and detail.

“The reality is that we don’t have all the answers,” she says. “We can show we’ve made progress and that we’re starting to make inroads into stakeholder engagement and research in trying to understand what our people want, but we will need to have further stakeholder engagement, together with government and local government, before we can start building.”

However, the miner is still implementing small-scale solutions, such as building five high-rise apartment blocks in Marikana West, to be completed in December, to test the efficacy of high-density rental accommodation.

“We might even decide to progress with a township development in Rustenburg – we just need to determine if it would work or not. This will all happen parallel to research and stakeholder engagement – the one will not wait for the other,” says Viljoen.

She further adds that, while the housing initiatives have been in place since transformation began in 1994, Lonmin has developed its approach in terms of housing and how it relates to employee value proposition.

Viljoen explains that, in the midst of the 2008 global economic crisis, the company decided to renege on a commitment it made to build 5 000 houses as part of housing expansion.

“At the time, we reasoned that we would rather save jobs instead of building houses. In retrospect, was that the right decision? Should we have cut more jobs and continued to build houses?”

Viljoen points out that Lonmin’s current employee value proposition favours the approach that an employee comes with housing and one is not a trade-off for the other.

“Each employee comes with a housing requirement – and that’s the change in thinking that the events at Marikana initiated,” she states.

“Is the housing expansion a new initiative? No. It has been ongoing since after 1994. But, are we thinking about it differently? Absolutely. I think we have to think about it differently. If everything at Lonmin was 100%, last year’s event would not have happened.”

Viljoen adds, however, that housing was not the only contributing factor to the Marikana tragedy, acknowledging that the situation, as a whole, comprises several complex issues.

Edited by: Martin Zhuwakinyu


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