Resuscitation of Arnot mine a ray of hope following despair of Tegeta era fraud

IN 2015, Exxaro Resources had to close the Arnot Mine near Middelburg (Mpumalanga), which they had operated on behalf of Eskom for 40 years. As a result, just over 1,000 employees were retrenched at a mine that still had 190 million tons of coal reserves.

Eskom’s Arnot-power station is located right next to the mine so coal could easily be transported to the power station on a conveyor belt. Why then did Eskom decide to cancel the contract and to source coal from mines further afield?

The answer emerged at the Zondo Commission of Inquiry into State Capture when it came to light that the Guptas’s struggling Tegeta Exploration and Resources was supposed to supply Arnot with coal from their Optimum mines. All the Gupta owned mines subsequently went belly up.

The Arnot Mine was the surrounding community’s main source of income for four decades, and its closure resulted in social decay, the breakdown of marriages and a few cases of suicide occurring among former employees.

However, this story took a positive turn: a few months after the mine’s closure eight former Exxaro employees decided to put their shoulder to the wheel to reopen the mine.

Eight former employees formed a company, Innovators Resources (IR), and pooled their retrenchment packages and pension payment as seed capital for the reopening project. They sought advice from Exxaro CEO, Mxolisi Mgojo, on how to proceed to take over Exxaro’s mining operations, obtain a mining licence from the Department of Mineral Resources and Energy, and a coal contract from Eskom.

At their first meeting they were all fired up to have the mine reopened within six months, but their enthusiasm was dampened when Mgojo informed them that it would take more than two years to get the mine back into operation.

To assist IR, Exxaro donated all its mining and office equipment at Arnot to IR. IR also found a business partner in Wescoal Holdings in order to have access to technical advice and to source additional input capital to get the mine running again.

Thus, Arnot OpCo was founded, with Wescoal having a 50% share and IR a 25% share in it. The 1,029 retrenched Exxaro employees collectively acquired a 25% share in Arnot OpCo. Consequently, Mantashe issued Arnot OpCo’s mining licence in a record time of five months.

At the recent relaunch of the mine Mgojo referred to his journey of faith with the former employees and how, for three-and-a-half years, they prayed together in his office every four weeks and planned for the re-opening of the mine and the re-employment of the former employees.

At present, Arnot OpCo already has 68 former employees in its employ and they are working hard to get the mine operational again.

Bontle Aphane, Arnot OpCo’s CEO, who previously was Exxaro’s project engineer on the mine, believes it would take at least another six to eight months before the mine would be able to start delivering coal to the Arnot power station and for it to be in a position to increase its workforce to around 600.

Aphane is a highly qualified and inspirational leader who, true to the eight IR colleagues’ mutual pledge to each other, dedicated herself 100% to the re-opening of the mine, not accepting other job opportunities amid huge personal sacrifice.

Solidarity and the National Union of Mineworkers (NUM) have members on the mine and the irony is that Mxolisi Hoboyi who, in his Exxaro days, was NUM’s branch chairperson at Arnot and a relentless trade union negotiator, is now Arnot OpCo’s chairperson and will now as a businessman sit on the other side of the table.

Arnot OpCo believes that negotiations with trade unions will be peaceful because all the employees are shareholders and sustainability and joint economic growth should be everyone’s priority.

The same argument can be advanced in respect of those mining communities that present a major challenge to surrounding mining houses at the moment: for Arnot Opco, better relationships with mining communities can be achieved through their open communication policy and the uniqueness that their employees are from those communities who are having shareholder status.

Once coal is being produced on a sustainable basis, Arnot OpCo will be a fully-fledged success story that can serve as a model for similar employee takeovers of especially mines with sufficient reserves that are closed by large mining houses when they no longer fit into their profit model.

Gideon du Plessis is Solidarity’s General Secretary.