Amnesty Condemns Lonmin Housing as Miner Sees More Spending Cuts

  • Platinum miner’s $7.5 million plan may be ‘reconsidered’
  • Amnesty International accuses Lonmin of failing on promises

Lonmin Plc said it may have to cut its promise to spend 100 million rand ($7.5 million) a year on housing even as Amnesty International condemned the world’s third-largest platinum producer for failing to fulfill pledges to employees made a decade ago.

The company, with 13,500 employees in need of formal accommodation, has consistently failed to deliver on its 2006 social and labor plan that vowed to build 5,500 houses for its workers by 2011, Amnesty International said in a report published Monday. Its reasons -- failed agreements with developers, lack of land, lower commodity prices and employee debt -- “do not stack up,” Amnesty said.

The poor conditions inhabited by Lonmin’s employees came to the fore in 2012 when police shot and killed 34 protesters near its Marikana operations. The subsequent inquiry known as the Farlam Commission found that many workers lived in “truly appalling” informal settlements and may have contributed to the discontent.

In its rebuttal to the Amnesty report, Lonmin said it has built 2,684 accommodation units since 2012 and has plans to build as many as 11,000 more through a number of initiatives, some of which involve local government. The company also said it may reconsider its plan to spend 100 million rand a year on housing due to tough economic conditions. Lonmin undertook a life-saving rights issue worth $407 million at the end of last year.

“The provision of housing for our entire workforce will of course take time and will involve the cooperation of all relevant stakeholders, particularly given current economic constraints,” Lerato Molebatsi wrote in a letter to Amnesty. “In this regard, we recently indicate that the provision of 100 million rand per annum for housing may have to be reconsidered with our regulator.”

Delay Reasons

Lonmin has provided several reasons why its 2006 labor plans haven’t been implemented, Amnesty said. Deals with developers fell through, the company didn’t have appropriate land, platinum prices plunged in the aftermath of the 2008 financial crisis and many employees have too much debt to get mortgages, the company has said, according to Amnesty.

The end result is that 13,500 workers life in informal accommodation, mostly shacks without running water, the report said. In South Africa, companies’ mining licenses require them to implement social and labor plans.

“The government has allowed Lonmin to flout the law seemingly without consequence,” Amnesty said.

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