A South African rural organization asked a court to review a deal in which Lonmin Plc, the world’s third-biggest platinum producer, sold a stake to a local community.
Lonmin in July agreed to pay the Bapo ba Mogale traditional community 564 million rand ($45 million) for the group to waive rights to royalty payments. The Bapo agreed to buy Lonmin shares with the funds as the company aimed to meet a 26 percent black ownership threshold, which the South African government requires to make up for economic disparities endured under apartheid.
The Bapo’s traditional council didn’t have the authority to conclude the deal with Lonmin, and the deal lacked procedural fairness and transparency, Julius Ramaboa, chairman of the Serodumo Sa Rona community organization and the main applicant in the court process, told reporters Thursday in Johannesburg.
“One of our primary concerns is that nearly nothing is known by the community at large about the terms of the transaction or its consequences,” Ramaboa said. “We therefore asked the court to order a process of court-supervised engagement with the relevant parties.”
The deal, concluded in November, gave the Bapo a 3.3 percent stake in Lonplats, which contains Lonmin’s two operating companies.
The court application was initiated by a small minority with vested interests, Lonmin said in an e-mailed response to questions.
“The Bapo ba Mogale community overwhelmingly endorsed the transaction,” it said. “The minister of rural development and land reform reviewed and then approved the transaction, as did the Department of Mineral Resources.”