Lonmin Plc said it will increase ownership by black South Africans as the platinum producer seeks to meet the country’s year-end deadline for 26 percent of stock to be held by locals.
Lonmin will pay the Bapo ba Mogale traditional community 564 million rand ($53 million) to waive its rights to royalty payments from the miner’s two operating companies, together known as Lonplats, the Johannesburg-based producer said in a statement today.
The Bapo will use those funds to buy about 13 million Lonmin shares and the company will transfer 0.9 percent in the two mining units to a development trust, it said. Lonmin’s Eastern Platinum Ltd. will buy 7.5 percent in its Pandora venture with Anglo American Platinum Ltd. from the community.
The transactions will increase “the black economic empowerment status of Lonplats by 3.3 percent,” the company said. Lonmin plans to further implement community and employee ownership trusts that will “collectively hold the 4.7 percent balance of the additional 8 percent equity empowerment” the company needs to attain by Dec. 31, it said.
South Africa enacted a Mining Charter in 2004, compelling operators to sell 26 percent of their local assets to black citizens by 2014 as a way to eradicate the wealth disparities created during white segregationist rule, which ended in 1994.
Black citizens held 18 percent of Lonmin’s assets before these transactions, company spokeswoman Sue Vey said by phone.
The Bapo ba Mogale would be required to retain the shares for at least 10 years, and the 149 million rand the community will be paid for this is included in the transaction price, Lonmin said. The group is also due 20 million rand in each of the next five years “to pay the administrative costs of running, controlling and directing the affairs of the Bapo,” the company said.
The transactions and the proposed share-ownership plan are expected to be completed in the final quarter of 2014, Lonmin said.