Brad Mills, CEO, Lonmin
Send this article to a friend
Print this page

» Lonmin's reputation takes a knock
» Lonmin reopens 200k oz/year Pandora
» Afplats mulled Lonmin co-op

» JSE:LONMIN PLC:
19883c 0%

Lonmin proves SA mining laws are workable
Allan Seccombe
Posted: Mon, 09 Oct 2006

[miningmx.com] -- LONMIN Platinum is the first major platinum producer in South Africa to be granted new order mining rights, giving the company greater peace of mind as it spends $1bn in the next five years on projects in the world’s premier platinum province.

“You are the first major platinum company to acquire their conversion of mining rights,” said Department of Minerals and Energy Minister Buyelwa Sonjica.

“Now that Lonmin has done it, hopefully Anglo Platinum and Impala Platinum and other companies will follow suit. They can all see the vision of the government contained in the Mining Charter is realisable,” she told a media presentation on the conversion.

a model worth emulating
Lonmin fully complied with the letter of the law when it came to not just bringing on board an empowerment partner, but in developing social and skills transfer programmes that fitted neatly with the government’s development programme, she said.

“This is a model worth emulating.”.

The mining industry has generally been fairly critical of the process to acquire new order mining rights, saying the process was slow, hampering their plans.

DME Director General Sandile Nogxina said Lonmin had simply complied with the letter of the law when he was asked what the company had done differently to other companies that have not yet received their 30-year new order rights.

World number three platinum producer Lonmin has four projects that will lift output to 1.3m oz by 2010, but CEO Brad Mills said the production target would be raised beyond that when the group releases its results in November.

"This is a big day for South Africa because it tells big foreign investors that you can do business in this country and get your licences," he said. "It removes uncertainty for us and allows us to plan long-term."

Lonmin, Anglo Platinum and Impala Platinum, the world’s three biggest platinum producers, were talking to their offshore suppliers to encourage them to open production facilities in South Africa in an upstream beneficiation process, Mills said.

“We’ve seen a very favourable response,” he said. “It is a far bigger skills multiplier than the mining industry alone.”
Free news alerts: click here to subscribe
Citing the example of Chile in the 1980s, he said some 30,000 jobs had been created in the mining industry, while a quarter of a million more were created in the servicing and supply sector.

The projects that will double the size of its Limpopo operations, it Pandora mine, grow Marikana and increase throughput at its processing plants. Between 3,000 and 5,000 jobs will be created in the next three to five years as the projects are developed.

Lonmin has Incwala Resources as its black empowerment shareholder, with a stake of 18%.

Incwala plans to refinance its balance sheet to pay down debt and begin paying dividends to its 50,000 black shareholders, said newly appointed CEO Zanele Mavuso Mbatha.

The original timeframe of seven years to pay down debt will be “significantly reduced”, she said. The two-year-old Incwala acquired its 18% stake in Lonmin for $490m in 2004.

One of the original criticisms of the Incwala transaction was that its shareholders had failed to benefit from the Lonmin deal.