Exxaro workers score as scheme pays out

André Janse van Vuuren | Wed, 14 Dec 2011 14:04

[miningmx.com] -- ALMOST 10,000 employees of JSE-listed diversified miner Exxaro Resources are to receive up to R135,000 in terms of an employee share ownership plan before January 15; the second leading miner to announce such a payout in recent weeks.

Exxaro CEO Sipho Nkosi on Wednesday announced the proceeds of its Mpower employee empowerment participation plan, which has reached maturity at the end of its five-year capital appreciation period. Mpower held approximately 3% of Exxaro’s shares with each of the 9,694 beneficiaries assigned units notionally linked to the shares held by the scheme.

Shares held by Mpower were sold on December 8, generating around R1bn for distribution. The amount that each beneficiary would receive would differ on the length of Mpower membership. For example, a beneficiary with five year’s membership would receive approximately R135,000.

In addition, each beneficiary has so far received an average of R9,210 in dividend payouts.

Membership to the scheme has been restricted to entry-level employees up to lower management. According to Exxaro’s head of human resources, Retha Piater, this group represent workers who are paid between R5,000 and R35,000 per month, on average. Middle and senior managers take part in share management incentive schemes.

Around 90% of Mpower beneficiaries are black, and 20% female.

“We formed Mpower to empower previously disadvantaged employees by sharing the group’s profits with them, and the scheme has proven to have been an excellent vehicle to do just that,” said Nkosi. “We expect the beneficiaries to use their Mpower payouts in a responsible and constructive manner to improve their current and future financial security.

Piater said Exxaro was still waiting for a tax directive on the payout, which she expected would occur within the next week. She said the processing of the payouts would be completed no later than the middle of January.

Exxaro’s share price has risen almost 200% since the launch of the scheme in 2006, from around R58 to the current R170.

Kumba Iron Ore, which on November 29 announced nearly 6,000 employees were to receive a payout of around R500,000 in terms of its employee share ownership scheme, has over the same time posted share price increase of around 350% - from R110 to around R500 per share.

Labour union Uasa’s divisional manager for mineral resources, Franz Stehring, was particularly appreciative of Exxaro’s scheme, saying the company didn’t need to had one as a means to achieve empowerment credits, as Exxaro already was compliant of BEE requirements in terms of its ownership structure.

“Schemes like this show that we don’t need nationalisation as people are already benefitting,” Stehring said.

However, Stehring said the size of the Kumba and Exxaro payouts has set a benchmark which unions could exploit in negotiations with other miners on similar schemes.

As for Exxaro, Nkosi said details of a new scheme were still being negotiated, and would have to be approved by shareholders at the company’s AGM in May.

ZINCOR

Piater said all qualifying employees at its closing zinc refinery, Zincor, would be entitled to the Mpower payout. The refinery would cease operating on December 31. She said that among the 600 affected workers, only around 180 have indicated that they would like to be employed elsewhere at Exxaro.

About 70 of these workers have already been placed, while the remaining 110 would remain on Exxaro’s payroll until at least end- February. More than 400 workers have opted for retrenchment packages.