Picture: BLOOMBERG
Picture: BLOOMBERG

Lonmin has been given a deadline by South African authorities to fix non-compliant parts of its social labour plan (SLP) or risk having its mining right suspended, according to a person familiar with the matter.

The Department of Mineral Resources issued a Section 93 notice to the platinum miner relating to shortcomings in Lonmin’s commitment to local development programmes, community education and procurement, said the person, who asked not to be identified because the notice hasn’t been made public.

Lonmin has had a fractious relationship with the community around its mines north-west of Johannesburg ever since the 2012 Marikana massacre. This year, the company was forced to temporarily close two shafts in May after community protests turned violent.

"We have received correspondence from the department that highlights areas identified as non-compliant and/or are behind schedule of implementation in our current SLP," Lonmin said in a statement. The company will provide evidence of compliance in some areas and is requesting time extensions in other areas, it said.

"We are further engaging the department to ensure the community intervention programmes proposed are sustainable and in line with the municipal and provincial priorities for economic development."

Ayanda Shezi, a spokesperson for the department, acknowledged a request for comment and said she would respond later.

The suspension or revoking of mining licences under Section 93 of SA’s mining law, while possible, is a "worst-case scenario", according to law firm Hogan Lovells. As in the case of Lonmin, companies found to be in breach are first given time to comply.

Lonmin fell for a seventh day, declining 3.3% to 73.50p a share at 12.14pm in London. Platinum dropped 0.9% to $974.55 an ounce.

SLPs are required by the government to make sure host communities benefit from mining beyond employment and taxes. However, they frequently have little input from community members and are rarely enforced, according to a report in March by the Centre for Applied Legal Studies.

"SLPs are not assisting in overcoming systemic inequality," it said. "A fundamentally changed system is therefore required", including a greater say for communities, a right for them to reject mining on their land and better communication with local authorities.

Bloomberg

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