SOCIAL PLAN COMPLIANCE
World Bank watchdog to probe Lonmin stake
The World Bank’s compliance adviser ombudsman has recommended an investigation of its investment arm’s $50m cash injection into Lonmin after it heard complaints that the platinum miner had received community support for its project but had failed to comply with a social and labour plan.
The International Finance Corporation (IFC), a member of the World Bank, invested $50m in Lonmin by buying shares in the world’s third-largest platinum miner in 2007.
It subsequently sold the stake eight years later.
Lonmin sought the investment for a cash injection into its mining operations, where a mechanisation programme was under way as well as a community and local economic development programme. The mechanisation programme was a failure and, by all accounts, its social and labour investment programme has been ineffective and was thrown into stark relief during the upheavals on its mines in 2012, which culminated in police shooting dead 34 protesters near Lonmin’s Marikana operations.
A number of complaints about Lonmin were brought to the ombud, which is an independent body that reports directly to the president of the World Bank Group.
Some of the complaints were directed at the Department of Mineral Resources, questioning Lonmin’s right to mine if it had failed to meet its social and labour plans on which mining rights were granted.
While the ombud’s decision to further investigate the IFC’s loan does not directly affect Lonmin, it does again raise questions around Lonmin’s difficulties in improving the lives of its employees and communities around its mines.
The complainants, mostly women living in Enkaneng, near Marikana, were represented by the Centre for Applied Legal Studies at the University of the Witwatersrand. They said there had been no broad community support for the project Lonmin was working on with the IFC’s money, Lonmin had not complied with its social and labour plans and there were adverse environmental effects stemming from Lonmin’s operations.
The ombud said there were questions about whether the IFC had adequately reviewed and supervised Lonmin’s ability to comply with its own plans, upgrading housing and conditions for its employees and communities around its mines "which were acknowledged to [be] poor".
Lonmin CEO Ben Magara said in an e-mailed response: "Lonmin confirms that it has received notification from the Office of the Compliance Advisor Ombudsman [CAO] of a compliance investigation after complaints concerning an
equity investment in the company by the International Finance Corporation…. This is a matter that the company has been dealing with for some time now and Lonmin is committed to providing any clarity whenever it is required by the CAO."